Oil rises on U.S. supply concerns, hopes for returning China demand
2022.12.12 21:49
© Reuters. FILE PHOTO: A container ship sails along Nakhodka Bay near the oil terminal in the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo
By Laila Kearney
(Reuters) – Oil prices rose for a second day on Tuesday as a key pipeline supplying the United States, the world’s biggest crude consumer, remained shut and on expectations loosening COVID restrictions in China, the second-biggest user globally, will boost demand.
futures rose 64 cents, or 0.8%, to $78.63 per barrel by 0202 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 64 cents, or 0.9%, to $73.81.
The closure of TC Energy (NYSE:) Corp’s Keystone Pipeline, which ships about 620,000 barrels-per-day of Canadian crude from Alberta to the United States, 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 U.S. state of Kansas reported on Dec. 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 inventories to decline. Seven analysts polled by Reuters estimated, on average, that stockpiles dropped by 3.9 million barrels in the week to Dec. 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 U.S. Department of Energy, due on Wednesday.
Analysts from Bank of America (NYSE:) expect that a successful economic reopening in China from its COVID-19 restrictions, combined with a dovish pivot by the U.S. Federal Reserve on its interest rate increases, could boost fuel demand and propel Brent oil prices above $90 a barrel.
