Oil prices increased for a second day on Tuesday due to the continued closure of a key pipeline feeding the United States, the world’s largest oil consumer, and the anticipation that more demand will arise from China’s recent relaxation of Covid-19 curbs.
Brent crude prices were up 93 cents, or 1.19%, to $78.92 per barrel by 10.32 A.M. (Thai time), while WTI crude futures were up 84 cents, or 1.15%, to $74.01.
The suspension of TC Energy Corp’s Keystone Pipeline, which transports around 620,000 barrels of Canadian oil per day from Alberta to the United States, has restricted supply and raised the potential of inventory declines at the Cushing, Oklahoma, storage hub.
Since the 14,000-barrel leak in Kansas, America, was discovered on December 7th, Keystone has been offline. TC Energy has not announced when they plan to resume service.
Because of this shutdown, it is anticipated that crude oil stocks in the U. S. will drop.
Bank of America analysts believe that a combination of factors, including a successful economic reopening in China following COVID-19 curbs and a dovish turn by the U.S. Federal Reserve on its interest rate hikes, could boost fuel demand and send Brent oil prices beyond $90 per barrel.
After massive protests against the restrictions last month, the worst display of public anger in mainland China since President Xi Jinping came to power in 2012, China has begun rolling back major aspects of its strict ‘zero-COVID’ policy.
This has included ending quarantine, removing required testing before many public events, and now discontinuing an app called “itinerary code” that critics argued might be used for mass monitoring and social control of the population.