Euro zone worry causes dip in global oil investments
Crude oil futures slipped on Friday, sinking below $98 per barrel and ending the week more or less where they started, after briefly breaking three-digit territory midway through the week. Despite a strong surge through the first few days of the week on optimistic reports from the West, oil investments ultimately fell on continued trader concern over the still-unresolved debt crisis afflicting the euro zone.
The oil commodity prices soared well past the resistant $100 per barrel mark on Wednesday, after news flooded the market of a new pipeline project in development between Canada and the U.S. which would drastically ease crude transportation from Cushing, Oklahoma to refineries along the Gulf Coast. Cushing, where the vast majority of crude stockpiles in the U.S. are stored can greatly benefit from having a direct link into the largely untapped markets of Latin America, a region where crude oil demand has been on the rise for the past few years.
Yet once the first round of enthusiasm around the pipeline receded, traders began expressing long-standing concerns with the debt crisis reigning over Europe, causing another shift in sector mood, and provoking a subsequent decline in crude oil futures and oil investments.
Though the planned rerouting of the Seaway pipeline should be of great help in relieving the U.S. of its ever-growing crude oil inventories, the project will not generate any viable results until 2012 is well underway, leaving oil investments still without a short term counter for the ongoing and rapidly spiralling debt crisis in the euro zone. Traders took the announcement that pipeline optimism was largely overdone for the time being as a cue to sell off their stakes for easy profit, causing a series of plunges of crude oil futures on the commodity index.
West Texas Intermediate crude oil prices for delivery in December ended the month on a $1.42 decrease, settling at $97.41 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude oil futures for settlement in January lost 16 cents and ended the week at $107.58 per barrel on the ICE Futures Exchange in London.