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Sentiment In Oil Markets Is Decidedly Bearish

Bearish

U.S. benchmark February WTI crude oil futures closed lower for a fifth straight session on Thursday, solidifying a lower close for the week. The market was higher earlier in the day on word of a closure of a major Canada-to-U.S. crude pipeline. However, those gains were erased when traders shifted their focus to concerns that global economic slowdowns would slash fuel demand.

Keystone Pipeline Shutdown Provides Early Support

Canada’s TC Energy said it shut its 622,000 barrel-per-day Keystone pipeline after a spill into a Kansas creek, Reuters reported.

Oil prices rose after the company announced the closure, but the rally dissipated as analysts noted that the U.S. Gulf is likely to have enough inventory to handle short-term outages.

According to Reuters, several analysts also said the section of the line that goes to Midwest refiners could be restarted soon. TC Energy has not announced when the pipeline would reopen.

Numerous Factors Weighing on Prices This Week

Fundamentally, traders are blaming this week’s sell-off partly on a surge in U.S. gasoline and distillate stockpiles. Fear of a recession and worries about Fed rate hikes are also weighing on sentiment. The week started on the wrong foot for bulls when OPEC+ decided not to cut output.

Uncertainty over how the Russian oil ban is expected to work could be another reason why traders are liquidating long oil positions.

Recession Fears Drive Demand Worries

The…





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