Oil prices rise because of Keystone pipeline leak disruption

13 Dec 2022 , 12:39 PM

Tuesday saw an increase in oil prices for a second day as a major pipeline supplying the United States, the world’s largest consumer of crude, remained closed and also on expectations that demand would increase with the relaxation of COVID restrictions in China, the world’s second-largest consumer of crude. By 02:02 GMT, Brent crude futures were up 64 cents, or 0.8%, to $78.63 per barrel, while U.S. West Texas Intermediate (WTI) crude futures were up 64 cents, or 0.9%, to $73.81.

Supply has been more limited due to the closing of TC Energy Corp.’s Keystone Pipeline, which transported 620,000 barrels of Canadian oil per day from Alberta to the United States. This has increased the likelihood that stockpiles at the Cushing, Oklahoma, storage hub may decrease. The WTI crude futures contract’s delivery point is Cushing.

Since a 14,000-barrel leak was discovered in the American state of Kansas on December 7, Keystone has been shut down. TC Energy has not provided a timetable for the line’s reactivation, which transports crude to refineries in the Midwest and Gulf Coast. The pipeline closure is anticipated to result in a decrease in U.S. crude inventories. Stockpiles decreased by 3.9 million barrels in the week leading up to December 9, according to an average estimate from seven analysts surveyed by Reuters.

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