Oil price up on US pipeline supply concerns

New York — Oil prices rose for a second day on Tuesday as a pipeline supplying the US, the world’s biggest crude consumer, remained shut and on expectations loosening Covid-19 restrictions in China, the second-biggest user globally, will boost demand.

Brent crude futures rose 64c, or 0.8%, to $78.63 a barrel by 2.02am GMT, while US West Texas Intermediate (WTI) crude futures gained 64c, or 0.9%, to $73.81.

The closure of TC Energy’s Keystone pipeline, which ships about 620,000 barrels a day of Canadian crude from Alberta to the US, has tightened supplies and raised the prospect that inventories at the Cushing, Oklahoma, storage hub will decline. Cushing is also delivery point for the WTI crude futures contract.

Keystone has remained shut since a 14,000-barrel leak in the US state of Kansas reported on December 7. TC Energy has not released a timeline for a restart of the line, which carries crude to refineries in the Midwest and Gulf Coast.

Expectations are that the pipeline closure will cause US crude inventories to decline. Seven analysts polled by Reuters estimated, on average, that stockpiles dropped by 3.9-million barrels in the week to December 9.

The poll was conducted ahead of reports from the American Petroleum Institute on Tuesday, and the energy information administration, the statistical arm of the US department of energy, due on Wednesday.

Analysts from Bank of America expect that a successful economic reopening in China from its Covid-19 restrictions, combined with a dovish pivot by the US Federal Reserve on its interest rate increases, could boost fuel demand and propel Brent oil prices above $90 a barrel.

Reuters