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US light crude had already surged yesterday, after TransCanada Corporation stated it would begin operations on the southern portion of the Keystone XL pipeline in the new year. This will be carrying oil from Cushing in Oklahoma to Port Arthur in Texas, which will help reduce domestic stockpiles. Today, data from the American Petroleum Institute has shown a drop in supply of 12 million barrels for the week ended 29 November. This compares with the 1.25 million barrels fall that analysts were expecting, and has helped US oil continue its rally.
The Organisation of the Petroleum Exporting Counties (OPEC) has agreed to keeps its production level unchanged at 30 million barrels per day. Two OPEC members, Iran and Libya, are currently underproducing due to western sanctions and civil conflict. However, both countries may return to full production in future, which could reduce the price of oil.
At 3.30pm (London time), the Energy Information Administration (EIA) will announce the latest inventories report. The market consensus is for a drop of 500,000 barrels, but if the inventories fall less than predicted we could see oil decline after the report.