Obama's Gift That Keeps On Giving; Price In Oil Jumps 2% Yesterday; Biggest Jump In Two Weeks -- WSJ

Yesterday I wrote: the spike in the price of oil yesterday by about $2.00/bbl was due to impending completion of the southern leg of the Keystone XL.

Today, in The Wall Street Journal:

U.S. oil prices rose 2% Wednesday, the biggest jump in two weeks, as traders and investors bet that the opening of a new pipeline will help alleviate a glut of crude in the Midwest.

Investors, traders and analysts in recent weeks have been focused on the race by pipeline operators to catch up with the oil-output boom in the U.S. For almost three years, U.S. oil prices have been depressed relative to world prices and Europe's Brent crude contract. That has been due largely to a lack of infrastructure, which has caused barrels to pile up in and around Cushing, Okla., the largest storage hub in the Midwest.

Oil futures prices on the New York Mercantile Exchange jumped after TransCanada Corp.  said the southern leg of its Keystone XL pipeline, which is to pump 700,000 barrels of crude a day from Cushing to oil refineries on the Gulf Coast, was nearly complete.

"This is going to add to the drain on Cushing quite a bit," said John Kilduff, founding partner of Again Capital in New York.

I really have to thank an alert reader who caught this story 24-hours early. It's an incredible story. Yes, it will drain a lot of oil from Cushing -- for round numbers: 35 million bbls storage capacity at Cushing; the Keystone XL will drain 5 million bbls/week from Cushing, and the initial fill will be 5 million bbls. Not trivial.

And without the northern leg, it will be hard to keep Cushing filled.

When that oil reaches the Gulf Coast, only Canadian oil, as I understand it, can be exported. American oil will be refined; refined products, like diesel and gasoline, can be exported.

Wow, the refusal to permit the northern leg of the Keystone XL -- the gift that keeps on giving. Wow, I love those activist environmentalists.