SAN FRANCISCO (MarketWatch) � Crude-oil futures ended lower Wednesday after the White House rejected a Canadian company�s proposal to build a pipeline from the U.S.-Canada border to the Gulf of Mexico.
Crude for February delivery �declined 12 cents, or 0.1%, to end at $100.59 a barrel in electronic trading on the New York Mercantile Exchange. It traded as low as $99.84 a barrel earlier.
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A written statement from President Barack Obama later Wednesday attributed the decision to reject the TransCanada Corp. TRP �CA:TRP �Keystone XL pipeline to lack of time for �a full assessment of the pipeline�s impact.� Officials were quoted as saying either others or TransCanada could reapply for the permit. Read more on Canadian stocks.
The pipeline would alleviate supply bottlenecks in Cushing, Okla., as it would get oil from the Canadian tar sands and oil fields in North Dakota out to the heart of the U.S. refinery industry alongside the Gulf of Mexico. Read more on TransCanada deal.
�There needs to be some way to get the oil (out of Cushing) and down to the coast in substantial volumes to stop a supply glut building up there again,� said Matt Smith, an oil analyst with Summit Energy in Kentucky.
Although oil stockpiles in Cushing have fallen from a record near 42 million barrels in April, they are still elevated.
This supply of oil has weighed on Nymex-traded oil prices and it�s part of the reason New York-traded oil has lost ground to its European counterpart, London-traded Brent oil, a reversal of a long-standing relationship between the two oil benchmarks.
Backers of the controversial pipeline say more Canadian imports would also mean less reliance on Middle Eastern oil imports, and the pipeline�s construction and operation would mean more U.S. jobs.
The project, however, has been under intense criticism from environmentalists, who worried about encouraging more production of the �dirtier� oil sands and about the path of the pipeline, which would environmentally sensitive areas.
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Wednesday�s reversal �is a knee-jerk reaction to the pipeline�s news,� said Smith.
After the close of oil trading in New York, TransCanada said it �remains fully committed� to the construction of the pipeline.
�We will re-apply for a Presidential Permit and expect a new application would be processed in an expedited manner to allow for an in-service date of late 2014,� said Russ Girling, TransCanada�s president and chief executive officer, in a statement.
IEA reportPrices had spent most of the day higher, fending off weakness from predictions of lower demand by the International Energy Agency. A increasingly lower dollar through the day and positive U.S. industrial-output report had provided some support.
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