New pipeline pathways into Midwest give oil investments boost on the charts

Crude oil futures made a tremendous surge in the U.S. today, finally breaking past the notoriously tough $100 per barrel mark after a Canadian energy firm ended a year-long standoff and ceded to shift the initially planned route of an oil pipeline out of an environmentally delicate region in Nebraska. Oil investments rallied on news that the pipeline would instead transport crude oil out of Cushing, Oklahoma where the bulk of U.S. crude is stored.

The two firms behind the agreement TransCanada Corp. and Enbridge Inc., are now racing to finalize the pipeline, which will provide the U.S. with a streamlined path into Latin America, allowing the nation to drastically unclog its supply space.

Crude stockpiles in Cushing have been on the rise for the majority of the year, causing heavy distortion on the commodity index and giving Brent an unprecedentedly protracted upper hand over West Texas Intermediate futures. The spread between the two benchmark oils currently sits at less than $12 per barrel.

Energy companies in the U.S. are now racing to ship their product into the American Midwest in order to gain easy access into Latin America, where the demand for crude oil has soared over the past few years. Oil investments have risen appropriately as traders returned to the product with renewed vigour.

A number of factors still run the chance of drastically altering the path crude oil futures and oil investments will take over the remainder of 2011 and into 2012:

-          The possibility of a complete withdrawal of U.S. troops out of Iraq may go a long way in forging a better relationship with Iran.

-          ExxonMobil’s presence in Kurdistan angering Iraqi officials.

-          Iran’s controversial nuclear program.

-          A potentially coming civil war in Iraq.

Crude oil traders are also keeping a close watch on Europe and its ongoing debt crisis.

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