Earthquake near crude storage facilities prompts rally in oil prices

Oil storage tanks in Cushing, Oklahoma. Photo by Daniel Acker/Bloomberg

NEW YORK, N.Y. – The price of crude oil rebounded this morning along with the rest of North American markets due to a number of factors, including those pertaining to the U.S. federal election, an earthquake, and an announcement by Russia.

Bloomberg News is reporting that the markets rallied after FBI Director James Comey said that Hillary Clinton’s handling of her e-mails wasn’t a crime.

A magnitude 5 earthquake that struck near the United States’ largest crude oil storage facilities in Cushing, Oklahoma. The earthquake prompted some pipeline operators to take precautions by ceasing operations at the site.

The U.S. Geological Survey reported on its website that the earthquake’s epicentre was located at a depth of 5 kilometres, roughly two kilometres west of Cushing. Pipeline operator Magellan Midstream Partners LP spokesman Bruce Heine said the company is working through a controlled shutdown in the area. There was no damage to its assets and the company expects to resume operations on Monday, he said.

The Organization of Petroleum Exporting Countries’ Secretary General Mohammed Barkindo said that Russia, which is the world’s biggest producer of energy, announced this morning that it approves an OPEC agreement to limit crude oil production and help re-balance the market.

After OPEC failed to agree on output quotas for member countries on Oct. 28, oil fell to below US$45 per barrel. According to data compiled by Bloomberg, OPEC pumped at a record rate in October.

“We would be nervous being short from these levels ahead of the meeting” of OPEC nations on Nov. 30, Adam Longson, commodity analyst at Morgan Stanley, said in a report. “OPEC can still spook markets with its rhetoric. If prices continue to slip, the chances for bullish OPEC headlines grow.”

Story courtesy Bloomberg News: http://business.financialpost.com/news/energy/rattled-oil-futures-jump-2-after-earthquake-hits-oil-storage-hub-cushing