NEW YORK (Reuters) – Oil prices stabilized around $2 a barrel on Monday on supply volatility, with a major pipeline shut to supply the United States and Russia threatening to cut output even as China’s easing of coronavirus restrictions boosted demand for oil. fuel. prospects.
Brent crude futures closed at $77.99 a barrel, up $1.89, or 2.5%. US West Texas Intermediate crude settled at $73.17 a barrel, up $2.15, or 3%.
Last week, Brent and West Texas Intermediate fell to their lowest levels since December 2021 as investors worried that a potential global recession could hurt oil demand.
The potential for a prolonged outage for TC Energy Corp (TRP.TO) The crude oil pipeline from Canada to the United States helped Keystone turn prices around.
“It appears that the repair of the Keystone pipeline is taking longer than expected (and) increasing the possibility of drawing more inventory at Cushing,” said Jim Ritterbusch of Ritterbusch and Associates.
Traders worried about how long it would take to clean up and restart the Keystone oil pipeline after the spill of more than 14,000 barrels of oil last week, the largest crude oil spill in the US in nearly a decade.
TC Energy shut down the pipeline after discovering the leak late last Wednesday in Kansas. The company told officials in Washington County, Kansas, that they have not yet determined the cause or timeline for the restart. Officials have been drilling around the 622,000-bpd Keystone line, a crucial passage for heavy Canadian crude shipped to US refineries and to the Gulf Coast for export.
The outage is expected to reduce supplies at Cushing, the storage hub in Oklahoma, and the delivery point for US crude oil futures.
A preliminary Reuters poll showed that seven analysts polled by Reuters estimated, on average, total crude inventories fell by about 3.9 million barrels in the week ending December 9.
Bank of America Global Research said Brent crude could rebound beyond $90 a barrel on the back of pivots in monetary policy by the US Federal Reserve and a “successful” economic reopening by China.
“Reopening China is definitely something the market is focused on,” said Phil Flynn, an analyst at Price Futures Group.
China, the world’s largest importer of crude oil, continued to ease its strict policy against the spread of the novel coronavirus, although streets in the capital Beijing remained quiet and many businesses remained closed over the weekend.
On Monday, lines formed outside fever clinics in the cities of Beijing and Wuhan, where COVID first emerged three years ago.
UBS analysts said in a note: “Oil markets are likely to remain volatile in the near term amid uncertainty about the impact on Russian production from the EU embargo, headlines on China’s coronavirus policy, and central bank moves in the US and Europe.” “.
Russian President Vladimir Putin said on Friday that Russia may cut production and will refuse to sell oil to any country that imposes a “stupid” ceiling on Russian export prices.
The Saudi energy minister said on Sunday that price cap measures had not produced clear results so far.
The number of tankers waiting to pass through the Bosphorus Strait in Istanbul decreased on Monday, which indicates a decrease in traffic congestion in recent times.
“The emerging EU embargo on Russian crude…may add moderate upside risks to energy prices in the next few months. But uncertainty about supplies should ease by spring 2023, after the oil product embargo expires (on February 5),” Deutsche Bank said in a note.
Additional reporting by Dmitry Zhdannikov, Florence Tan and Emily Chao in Singapore. Editing by Margarita Choi and David Gregorio
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