Delhi, India: Oil prices increased for a second day on Tuesday due to expectations that loosening Covid restrictions in China, the world's second-largest user, will boost demand and the closure of a crucial pipeline that supplies the United States, the largest consumer of crude.
By 0202 GMT, Brent crude futures were up 64 cents, or 0.8%, to $78.63 per barrel, while WTI crude futures were up 64 cents, or 0.9%, to $73.81.
The conclusion of TC Energy Corp's Cornerstone Pipeline, which ships around 620,000 barrels-per-day of Canadian rough from Alberta to the US, has fixed supplies and raised the possibility that inventories at the Cushing, Oklahoma, stockpiling center point will decline. The delivery point for the WTI crude futures contract is also in Cushing.
Since a 14,000-barrel leak was reported on December 7 in the US state of Kansas, Keystone has been shut down. The timetable for restarting the pipeline that transports crude to Midwest and Gulf Coast refineries has not been provided by TC Energy.
Crude inventories in the United States are expected to decrease as a result of the pipeline closure. Reuters surveyed seven analysts and found that stockpiles decreased by an average of 3.9 million barrels in the week ending December 9.
The poll was conducted ahead of Tuesday's reports from the American Petroleum Institute and Wednesday's reports from the Energy Information Administration, the US Department of Energy's statistical arm.
Bank of America analysts anticipate that a successful economic reopening in China following its Covid-19 restrictions, in conjunction with a dovish reversal by the US Federal Reserve on its interest rate increases, could increase fuel demand and push Brent oil prices above $90 per barrel.