Oil steadies on course for least volatile week since 2021

Oil eased as a brief outage on North America’s Keystone pipeline failed to shake prices out of what is set to be the smallest weekly range in years.

Global benchmark Brent earlier rose toward US$84 a barrel, before erasing those gains; U.S. benchmark West Texas Intermediate slipped away from the US$80 mark.

Pipeline operator TC Energy Corp. confirmed Keystone’s integrity, adding service was temporarily suspended “as a precautionary measure” and that no crude was released.

Oil has traded in a tight band this year, with even less volatility this week, confining Brent prices to their narrowest range since September 2021. Cutbacks by Opecplus and rising tensions in the Middle East and Red Sea have been balanced by surging supply from producers outside the cartel including the United States. Persistent concerns about China’s growth have added to headwinds.

Still, comments from United States Federal Reserve chair Jerome Powell that the central bank is getting close to the confidence it needs to start lowering interest rates were supportive of commodities including crude.

“An improvement in fundamentals has prompted a turnaround in investor confidence,” Barclays PLC analysts including Amarpreet Singh said in a report. “Geopolitical risk remains elevated but is not reflected in the price, in our view.”

China’s oil demand has entered a low-growth phase as the nation shifts away from fossil fuels, the country’s biggest energy producer said. While overall consumption will continue to grow, increased take-up of electric vehicles and trucks powered by liquefied natural gas will eat into gasoline and diesel use this year, Lu Ruquan, president of China National Petroleum Corp.’s Economics and Technology Research Institute, told Bloomberg Television.

GEOPOLITICAL RISK REMAINS ELEVATED BUT IS NOT REFLECTED IN THE PRICE.