Oil extended its gains on Tuesday as a major pipeline carrying resources to the United States continued to shut down, raising concerns about a possible supply shortage in the world’s largest crude consumer.
Brent crude futures were up 1.5% to $79.15 a barrel by 05:25 UTC, while US West Texas Intermediate crude futures were up 1.4% to $74.22. Both benchmarks were up more than 2% when they adjusted in the previous session.
Concerns about Russia’s oil output have surfaced after President Vladimir Putin said on Friday his country could cut production.
The closure of TC Energy’s Keystone pipeline, through which approximately 620,000 barrels per day of Canadian crude is shipped from Alberta to the United States, has reduced supplies and increased the possibility of an inventory draw at its storage hub in Cushing, Oklahoma.
The Keystone pipeline was shut down by the discovery of a 14,000 barrel leak in the US state of Kansas on December 7.
TC Energy has not issued a timetable for restarting the line, which transports crude to refineries in the Midwest and on the Gulf Coast.
Oil prices also got some support from expectations that easing COVID-19 restrictions in China, the world’s second largest oil consumer, will boost demand.
China has lifted some of its tough coronavirus restrictions in the past week, including easing COVID-19 testing requirements and stopping tracking people’s travel logs for virus-related purposes.
