Oil Prices Dip as Pipeline Disruption Keeps Stocks in Check

Oil prices eased on Thursday, after the U.S. market hit a more than two year high on reduced crude flow from Canada and falling stocks.

Brent crude, the global oil benchmark, fell 0.5% to $62.98 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.3% at $57.85 a barrel. Trading was expected to be subdued given the U.S. Thanksgiving holiday.

On Tuesday, Keystone pipeline operator TransCanada said flow from its crude pipeline to the U.S. would be reduced by 85% through the end of November after an oil spill last week.

The pipeline disruption is expected to cause further draws on U.S. inventories. The U.S. Energy Information Administration reported on Wednesday that crude inventories fell by 1.9 million barrels in the week ended Nov. 17.

"The bullish edge, however, was somewhat moderated as U.S. producers are taking a full advantage of the recent price rally," said Tamas Varga, analyst at brokerage PVM.

U.S. output hit a fresh record weekly high of 9.658 million barrels a day, according to EIA data.

Rising U.S. output is one of the factors which will be in focus at next week's meeting of the Organization of the Petroleum Exporting Countries. The cartel and other major producers--including Russia--will use the meeting to review the effectiveness of a production cut deal that was implemented in January and designed to reduce global stocks.

Some analysts warned that investors assuming the meeting will yield an extension of the deal beyond its current expiry of March 2018 could be disappointed.

"The market has managed to believe that OPEC and Russia are going to make a final decision on extending cuts at the meeting next week and that has not been what they have communicated, they have been very clear that they want to wait until February to make the final decision," said Bjarne Schieldrop, chief commodities analyst at SEB Market.

"It makes perfect sense to wait to February to have as much data as possible to assess the situation because there is no point in cutting if there is no need."

Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.3% to $1.76 a gallon. ICE gas oil changed hands at $561.25 a metric ton, down $1.00 from the previous settlement.

Write to Sarah McFarlane at sarah.mcfarlane@wsj.com

(END) Dow Jones Newswires

November 23, 2017 05:56 ET (10:56 GMT)