International oil prices fell on Thursday (December 15), as the dollar index strengthened, commodities became more expensive for holders of other currencies, and the possibility of further interest rate hikes by the Federal Reserve exacerbated demand concerns. The partial resumption of operations at the Keystone pipeline also put selling pressure on the market.
At 16:54 Beijing time, NYMEX crude oil futures fell 0.57% to $76.84/barrel; ICE Brent crude futures fell 0.48% to $82.35/barrel.
Federal Reserve Chairman Jerome Powell said on Wednesday (December 14) that even if the economy slides into a possible recession, the central bank will raise interest rates further next year. He also said the Fed would pay a higher price if it failed to get more firm in its grip on inflation.
“Oil prices were under pressure today as the Fed’s hawkish guidance on monetary policy revived fresh concerns about economic growth, boosting the dollar and pushing commodity prices lower,” said Tina Teng, an analyst at CMC Markets.
Also weighing on prices was Canada’s TC Energy Corp, which said it was resuming some operations on the Keystone pipeline. A week earlier, the pipeline was shut down after a leak in rural Kansas spilled about 14,000 barrels of crude oil.
Traders have been awaiting news on when Keystone, the key artery for transporting Canadian crude to U.S. refineries, has a normal capacity of 6.22 million bpd when it will restart operations. The spill, the largest in nearly a decade, is expected to take weeks to clean up.
Russia’s flagship Urals crude was sold at a steeper discount this month after Europe banned imports of Russian oil, while major buyer India was buying well below the $60 ceiling agreed in the West, four market sources said. India has become the main destination for seaborne exports of Russian Urals crude since Russia began its invasion of Ukraine in February.
The European Union has banned imports of Russian seaborne oil from Dec. 5, prompting Moscow to seek alternative markets, mainly in Asia, for about 1 million barrels per day of crude exports. Also on Dec. 5, the G7 imposed a $60 price cap on Russian seaborne oil in an attempt to limit Moscow’s ability to fund the war in Ukraine. Russia said it would not abide by the cap even if it had to cut output.