2017.11.2401:30:00UTC+00U.S. Crude Oil Records New Two-Year High on Keystone Pipeline Closure

Prices of U.S. crude oil reached a fresh two-year high on Friday as the closure of a major crude pipeline, Keystone, tightened supply in North American markets.

U.S. WTI crude futures traded at $58.37 per barrel, higher by 35 cents or 0.6 percent compared to their last settlement. The U.S. benchmark hit a record high of $58.58 per barrel early in the session, its highest level since July 2015.

Meanwhile, the international benchmarks, Brent crude futures, traded at $63.48 per barrel, 7 cents lower from its last close.

In an indication of a tightening market, both benchmark contracts are in backwardation, where spot prices are higher compared to those for future delivery, which makes it undesirable for traders to stock oil for later selling.

The close of the major crude pipeline from Canada to the U.S., which equates to the 590, 000 bpd being closed off from the market, has helped bolster U.S. crude as it cuts the inventory in the storage hub of Oklahoma, according to traders.

Efforts by OPEC along with other producers led by Russia to curb 1.8 million bpd of production have also helped to tighten the market. On November 30, OPEC will convene to discuss its policy and it is expected to extend the production cut agreement.