WTI bulls move in on supply side issues, Fed looms

• Crude Oil was higher on Monday, as supply-side issues offset concerns of weaker demand.
• TC Energy Corp said its continuing its recovery efforts but gave no indication of a restart.

West Texas Intermediate, WTI, crude oil was higher on Monday, as supply-side issues offset concerns of weaker demand. At the time of writing, WTI is trading at $73.40 and a touch higher by some 0.1% having climbed from a low of $73.27 to reach a high of $73.51. 

Supply issues have overcome recession worries despite the pending US consumer Price index and the Federal Reserve meeting which are events coming up over the next sessions. The Fed is expected to hike rates by 50 bps on Wednesday after today’s inflation data from other US which could cement the sentiment surrounding the Fed. 

”Core prices likely maintained a firm pace in November, rising 0.3% MoM for a second consecutive month. Shelter inflation likely remained the key wildcard, though we look for goods deflation to act again as an offset. Importantly, gas prices are expected to provide relief to the CPI, as they fell in Nov. All told, our m/m forecasts imply 7.3%/6.1% YoY for total/core prices,” analysts at TD Securities said.

Meanwhile, the money markets are currently pricing an almost 75% chance that the US central bank will hike rates by 50 basis points after delivering four successive 75 basis point rate increases. However, some analysts anticipate a hawkish outcome from the event. 

TC Energy Corp latest

For oil-related news, despite reports that the Keystone pipeline was being partially reopened, it remained completely shut on Monday, analysts at ANZ Bank explained:

”TC Energy Corp said its continuing its recovery efforts but gave no indication of a restart. The pipeline is a key conduit for Canadian crude into the WTI pricing point of Cushing. WTI subsequently rallied more than 3%.”

Meanwhile, the analysts noted that the uncertainty surrounding the impact of European sanctions on Russian oil is subsiding:

”Ship tracking data suggests Russian crude is being diverted to China and India. The flows into Asia have surge to more than 3mb/d in the week to 9 December. This accounts for 89% of all shipments from Russia. Weakness in China is also persisting. The number of supertankers signalling China as their next destination fell to 104, the lowest level since 30 September. The glut of tankers in Turkey’s vital shipping strait is also clearing. On Sunday, only 19 tankers were waiting to pass through, down from 27 on Saturday.”