Commodities
Canada’s Trans Mountain pipe expansion to disrupt oil flow to US, boost prices
![](https://letizo.com/wp-content/uploads/2023/09/canadas-trans-mountain-pipe-expansion-to-disrupt-oil-flowto-us-boost-prices_6509a0f9e83db.jpeg)
![Canada's Trans Mountain pipe expansion to disrupt oil flow to US, boost prices](https://i-invdn-com.investing.com/trkd-images/LYNXMPEJ8I0AX_L.jpg)
© Reuters. FILE PHOTO: A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada June 7, 2021. REUTERS/Jennifer Gauthier/File Photo
By Nia Williams and Stephanie Kelly
CALGARY (Reuters) – Canada’s Trans Mountain oil pipeline expansion (TMX), which will nearly triple the flow of crude from Alberta to Canada’s Pacific Coast beginning early next year, will shake up North America’s supply by diverting barrels now mainly delivered to refiners and exporters in the U.S. Midwest and Gulf Coast.
Its startup could add as much as $2 per barrel to prices paid by U.S. Midwest oil refineries that sit along Canada’s existing main oil-export route. Plants that benefited from discounted oil include those operated by BP (NYSE:), Citgo Petroleum, Exxon Mobil (NYSE:) and Koch Industries’ Flint Hills Resources, analysts said.
“They will be competing for barrels that no longer transit through their region,” said a Calgary-based oil trader. “The market will have to reshuffle.”
The long-delayed and controversial Canadian government-owned C$30.9 billion ($22.81 billion) TMX project is set to begin shipping crude early next year, although it could face up to nine months delay due to a last-minute proposed route change.
Once it starts operating, Canada will be able to ship an extra 590,000 barrels per day (bpd) to Pacific ports for delivery to U.S. West Coast and Asia refiners, where demand for heavy sour crude is expected to climb in the longer-term.
FEWER BLOWOUTS
Canada has supplied the Midwest with all of its crude imports since 2019, according to a Reuters analysis of Energy Information Administration data. That has left Canadian oil producers vulnerable to deep price discounts or “blowouts” whenever pipelines become congested or rupture.
Pipeline operator Enbridge (NYSE:), which ships the bulk of Canada’s 3.8 million bpd of crude exports to the U.S., expects to see flows on its Mainline system drop by up to 300,000 bpd once TMX opens.
Last December, a spill on TC Energy (NYSE:)’s 622,000 bpd Keystone pipeline drove the Canadian heavy crude discount to U.S. oil to more than $33 a barrel, more than double its typical discount.
Having more Canadian export pipeline capacity means crude bottlenecks building up in the Alberta storage hub Hardisty should happen less often, reducing volatility and keeping prices steadier.
“For a decade the U.S. Midwest could count on that kind of blowout every year or two,” said Rory Johnston, founder of the Commodity Context newsletter. “That’s less likely now.”
The start-up of TMX could add a “buck or two” to the cost of a barrel for Midwest refiners, he estimates.
GULF COAST RE-EXPORTS SHUT OUT
TMX also will make Canadian crude “re-exports” from the Gulf Coast less viable, squashing a trend that has gained in momentum in recent years, and increasing shipments of Canadian oil to China, said Matt Smith, lead oil analyst for the Americas at Kpler.
So far this year, over 200,000 bpd of Canadian crude has been re-exported from the U.S. Gulf Coast, up from about 73,000 bpd in 2019, Kpler data showed. China is currently the leading destination for these Canadian re-exports, taking in 194,000 bpd in August.
Heavy Canadian crude will still make it to the U.S. Gulf to be used by refiners there, Smith added, and the region could also see an uptick in Latin American crude being displaced from the U.S. West Coast by TMX barrels.
($1 = 1.3549 Canadian dollars)
Commodities
Oil prices settle lower after weak August jobs report adds to demand concerns
![](https://letizo.com/wp-content/uploads/2024/09/oil-prices-settle-lower-after-weak-august-jobs-report-addsto-demand-concerns_66dc53fb8f210.jpeg)
Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand.
At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.
U.S. economic slowdown worries resurface after weak jobs report
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.
U.S., Europe working on Iran sanctions
Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia.
The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine.
Commodities
Goldman Sachs expects OPEC+ production increases to start in December
![](https://letizo.com/wp-content/uploads/2024/09/goldman-sachs-expects-opec-production-increases-to-start-indecember_66dc53f61803f.jpeg)
(Reuters) – Goldman Sachs adjusted its expectations for OPEC+ oil production saying it now expects three months of production increases starting from December instead of October, the bank said in a note on Friday.
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding it could further pause or reverse the hikes if needed.
However Goldman Sachs maintained its range of $70-85 per barrel and a December 2025 Brent forecast at $74 per barrel.
The investment bank expects the effects of a modest reduction in OPEC+ supply in the upcoming months to be counterbalanced by easing effects from the current softness in China’s demand and faster-than-expected recovery of Libya’s supply.
“We still see the risks to our $70-85 range as skewed to the downside given high spare capacity, and downside risks to demand from weakness in China and potential trade tensions,” Goldman Sachs said.
Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel on Friday, their lowest level since December 2021. U.S. West Texas Intermediate crude futures fell $1.48 on Friday, or 2.14%, to $67.67, their lowest since June 2023. [O/R]
Commodities
Citi, Bank of America see oil prices potentially going to $60
![](https://letizo.com/wp-content/uploads/2024/09/citi-bank-of-america-see-oil-prices-potentially-going-to60_66db0275685ed.jpeg)
Investing.com — Strategists at Citi Research said oil prices could decline to around $60 per barrel by 2025, citing a significant market surplus as the primary driver.
While recent supply disruptions in Libya and a delayed production cut unwinding by OPEC+ have offered short-term support for Brent prices in the $70-72 range, Citi views this as temporary.
“At the time of writing, markets have not reacted to the OPEC+ decision, with Brent around flat to the 4 September close. Still, the Libyan situation could take months rather than a week to resolve, strategists wrote.
They highlight the likelihood of a strong market surplus emerging next year, pushing prices lower.
“We recommend selling on a bounce toward ~$80 Brent, as we look ahead to moves down to the $60 range in 2025 as a sizeable market surplus emerges,” the note states.
OPEC+ has delayed the start of its planned production cut unwind from October 2024 to December 2024, with the process now set to conclude by the end of 2025. This decision comes in response to recent market weakness and price declines, despite ongoing disruptions to Libyan oil supplies and broader economic concerns in the U.S. and China.
Separately, Bank of America’s Commodities Research team has revised down its price forecast to $75 per barrel for the second half of 2024, down from nearly $90, and for 2025, reduced from $80.
The team cites concerns about growing global oil inventories despite assuming OPEC+ will delay planned production increases. They note that weaker demand growth, combined with record OPEC+ spare capacity exceeding 5 million barrels per day, has dimmed the outlook for oil prices.
“In effect, we now see Brent oil prices moving from the top toward the middle of our unchanged $60-80/bbl medium-term range faster than previously warned,” BofA strategists said. This surplus in capacity, along with slower demand, also reduces the risk of price spikes from potential geopolitical disruptions.
- Forex2 years ago
Forex Today: the dollar is gaining strength amid gloomy sentiment at the start of the Fed’s week
- Forex2 years ago
How is the Australian dollar doing today?
- Forex2 years ago
Dollar to pound sterling exchange rate today: Pound plummeted to its lowest since 1985
- Forex2 years ago
Unbiased review of Pocket Option broker
- Cryptocurrency2 years ago
What happened in the crypto market – current events today
- World2 years ago
Why are modern video games an art form?
- Stock Markets2 years ago
Morgan Stanley: bear market rally to continue
- Commodities2 years ago
Copper continues to fall in price on expectations of lower demand in China