The Pipeline Shutdown Causes A Rise in Oil Prices

Following the revelation that oil deliveries to Hungary via the Druzhba oil pipeline had been temporarily interrupted due to a loss in pressure, oil prices rose on Tuesday and settled higher.

Brent crude futures rose 72 cents to $93.86 a barrel by day's end, but U.S. crude futures remained unchanged. West Texas Intermediate crude climbed by $1.05 to $86.92 a barrel.

Ukraine informed Russia's state-owned pipeline monopoly Transneft of the pipeline disruption, Transneft said Tuesday, as reported by RIA.

Two individuals were killed in an explosion in a Polish village near the Ukrainian border, which the United States says was caused by stray Russian missiles.

The International Energy Agency announced on Tuesday that 1.4 million barrels per day (bpd) must be replaced as a result of the European Union's December 5 ban on seaborne Russian oil.

Phil Flynn, an analyst with Price Futures Group, commented, "The IEA's data on global oil inventories should be considered optimistic."

In October, U.S. producer prices grew less than anticipated, supporting oil prices. This is another indication that inflation is beginning to decline, which could let the Federal Reserve to cease its aggressive rate hikes.

Following the announcement of the report, Wall Street indexes rose while the U.S. dollar index fell, making oil priced in dollars cheaper for foreign currency holders.

John Kilduff, a New York-based partner at Again Capital LLC, stated, "In a way, the inflation news was positive, and it appears that the market is currently being pushed higher." We continue to observe the inverse dollar effect.

The IEA forecasts that a gloomy economic outlook will cause global oil consumption to fall by more than a quarter million barrels per day (bpd) in the fourth quarter of 2022, with demand growth falling to 1.6 million bpd in 2023 from 2.1 million bpd in 2018.

During the week ending November 11, approximately 5.8 million barrels were removed from U.S. oil inventories, according to market sources citing American Petroleum Institute data released on Tuesday. While gasoline stocks grew by approximately 1.7 million barrels, distillate stocks grew by approximately 850 thousand barrels. [API/S]

Wednesday will see the release of inventory data from the United States government.

In China, COVID cases increased, particularly in Beijing, while the growth of industry output slowed.

JPMorgan (NYSE:JPM) reduced its quarterly and annual forecasts for China's economic expansion. The Organization of Petroleum Exporting Countries (OPEC) has lowered its forecast for the growth of global oil demand in 2022 for the fifth time since April, citing escalating economic concerns such as high inflation and rising interest rates.