Market Report And Analysis For 11/20/2017

The modest support that existed in the market this morning has not only sustained itself into the early afternoon, but has gained significant strength. Traders have been driving crude oil and product paper prices to massive session gains following comments out of Saudi Arabia reinforcing the odds the production cuts put into play early this year would be extended through 2018, thereby returning a balance in global oil supply and demand.

Markets had been growing more and more anxious over whether a production cut will occur. Saudi oil ministers are unanimously supporting an extension through the end of 2018, but Russia, the largest non-OPEC signatory of the deal, is sending mixed messages. A while back, Russian Prime Minister Vladimir Putin gave his support to a deal extension, but oil officials in the country are more skeptical and worry that continued volume reductions could prove bad for business. With the November 30 meeting approaching and a holiday week causing light trades next week, traders appear to be jumping into the market well before the OPEC meeting to give time to benefit from the price boost if OPEC agrees to cuts.

Adding to the upward pressure is news that a portion of the Keystone Pipeline was shut down after a leak in South Dakota, cutting off flows from Alberta to Cushing, OK and to Patoka, IL, though the line to the Gulf Coast remains operational. The 5,000 barrel leak came just days before a vote on Keystone XL, an additional line that would increase the flow of oil from Canada. The outage could be giving the market a boost, since the line outage is trapping crude in Canada until the leak is fixed.