NEW YORK: US oil futures rose over $2 a barrel to a four-week high yesterday in a third straight day of gains on expectations that the January start-up of a pipeline from Cushing, Oklahoma, to the Gulf Coast would drain crude stocks at the giant storage hub.
TransCanada Corp’s 700,000 barrel-per-day Cushing-to-Port Arthur, Texas, pipeline will begin service on January 3, the company said in a tariff filing with the Federal Energy Regulatory Commission (FERC) on Monday after the trading session closed for the day.
The pipeline should draw down inventories at Cushing, the delivery point of the US oil futures contract, supporting US crude futures relative to international benchmark Brent crude. Brent crude for January delivery rose $1.17 to settle at $112.62 a barrel, after earlier hitting an 11-week high of $112.93. US crude, also known as West Texas Intermediate or WTI, rose by $2.22 to settle at $96.04 a barrel, its largest daily percentage gain since September 18. Brent’s premium to US crude narrowed by more than $1 to $16.58 from Monday’s close of $17.63.
US crude’s gains came despite expectations that weekly inventory data from the American Petroleum Institute and US Energy Information Administration would show an eleventh straight weekly build in inventories. Over the past 10 weeks, US crude inventories have increased by nearly 36 million barrels to hit the highest level for November on record, according to government data, following seasonal refinery maintenance that cut demand.
Commercial crude oil inventories were forecast to have risen by 300,000 barrels in the week that ended on November 29, an extended Reuters poll of eight analysts showed.
In Libya, where protesters have shut most oil fields and ports and helped support Brent prices, production has risen slightly in the past two weeks, Deputy Oil Minister Omar Shakmak said. Exports of just 130,000 barrels per day remained a fraction of Libya’s 1.4m b/d output only five months ago. Reuters
