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Oil Stabilizes in Anticipation of OPEC+ Review and US Stockpiles Update

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Oil Stability Ahead of OPEC+ Review and US Stockpiles Update

Oil prices remained steady as the market awaited an OPEC+ review of the global crude market and a weekly update on US stockpiles. West Texas Intermediate (WTI) saw little change above $89 a barrel, following a volatile swing of over $2.50 on Tuesday before ending slightly higher. The Joint Ministerial Monitoring Committee of the OPEC+ alliance was set to convene online, with no expected changes in policy as Saudi Arabia and Russia continue to lead output curbs.

US Crude Inventories and Pipeline Maintenance

The US government was set to release figures on crude inventories, with declining holdings observed, including at the storage hub in Cushing. The industry-funded American Petroleum Institute reported a modest increase in inventories at the Oklahoma site last week, but a draw on a nationwide basis. Flows on TC Energy Corp.'s Keystone oil pipeline dropped to zero, potentially disrupting deliveries to Cushing as the company conducted maintenance on the pipeline.

Factors Influencing Oil Prices

Oil prices have rallied since mid-June due to OPEC+ supply cuts, resulting in tightening inventories and increased competition for prompt barrels. However, recent sessions have seen resistance as investors express concerns about potential interest rate hikes by the Federal Reserve and a surge in the value of the dollar, making commodities more expensive for buyers. In conclusion, the oil market remained stable as the industry awaited the outcome of the OPEC+ review and the US stockpiles update. Factors such as declining inventories, pipeline maintenance, and market concerns about interest rates and currency fluctuations continue to influence oil prices. Market participants will closely monitor these developments for potential impacts on the energy sector.

Implications of Oil Market Stability for New Businesses

The stability of oil prices, as the market anticipates the OPEC+ review and US stockpiles update, carries significant implications for new businesses, particularly those in the energy sector. With West Texas Intermediate (WTI) prices remaining steady, businesses may find some predictability in their operational costs, at least in the short term.

Inventory Levels and Business Planning

The declining US crude inventories, including at the storage hub in Cushing, indicate a tightening market. For new businesses, this could mean increased competition for resources and potential upward pressure on prices. The maintenance on TC Energy Corp.'s Keystone oil pipeline, which has disrupted flows, adds another layer of complexity to the supply landscape.

Market Influences and Business Strategy

The rally in oil prices since mid-June, due to OPEC+ supply cuts, has led to increased competition for prompt barrels. However, concerns about potential interest rate hikes by the Federal Reserve and a stronger dollar have created resistance. These factors, which make commodities more expensive for buyers, require new businesses to be strategic in their planning and risk management. In conclusion, while the oil market's stability offers some predictability, new businesses must navigate various influencing factors. These include inventory levels, supply disruptions, and broader economic trends, all of which can impact business costs and strategy.
Story First Published at: https://financialpost.com/pmn/business-pmn/oil-steadies-ahead-of-opec-review-and-us-stockpiles-update
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