Oil slips on modest Keystone impact; more volatility seen

Thu Apr 7, 2016 4:11pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil settled lower on Thursday after data showed higher weekly inventories at the U.S. crude storage base despite a pipeline outage, but prices pared losses on short-covering, suggesting more volatility ahead.

"The energy trade remains choppy amidst fundamental and macroeconomic cross-currents that are shifting daily," Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates said in a note.

Brent futures LCOc1 settled down 41 cents, or about 1 percent, at $39.43 a barrel, retracing losses from the session low that saw Brent down more than $1, or nearly 3 percent.

U.S. crude futures CLc1 finished down 49 cents at $37.26, after tumbling as low as $36.69.

Prices fell after market intelligence firm Genscape reported a build of 255,804 barrels at the Cushing, Oklahoma delivery hub for U.S. crude futures in the week to Tuesday.

The build came even though TransCanada Corp (TRP.TO: Quote) had shut since Saturday its 590,000 barrels per day (bpd) Keystone crude pipeline that moves crude to Cushing and Illinois. The shutdown was ordered after the company feared a potential pipeline leak.

While Genscape did note a 481,485-barrel decline at Cushing in the five days to Tuesday, potentially from the Keystone outage, that was not enough to offset total inflows for the week.

"I guess people were expecting even more impact from the Keystone closure," said a trader.   Continued...

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015.    REUTERS/Nick Oxford