MW:Crude prices flirt with $96 on pipeline closure
By Sara Sjolin and Carla Mozee, MarketWatch
LONDON (MarketWatch) — U.S. crude-oil futures climbed on Tuesday on the back of pipeline closures in Canada, as investors waited for a report expected to show a decline in oil inventory.
Crude oil for August delivery CLQ3 +0.48% rose 60 cents, or 0.6%, to $95.76 a barrel, after briefly moving above the $96 level.
Oil prices found support in news that a major pipeline in the Canadian province of Alberta remained shut after heavy flooding initially closed two pipelines. Enbridge Inc. ENB -2.16% CA:ENB -2.00% late Monday said it has returned one of the pipelines to service.
“The pipeline interruption has already resulted in Canadian oil-sand production being scaled back, and is likely to contribute to lower U.S. oil imports and falling U.S. inventory levels,” analysts at Commerzbank said in a note.
“This incident could reduce public acceptance in the U.S. for new pipeline projects. This would particularly affect the planned construction of the northern section of the Keystone XL pipeline, which is to run from Alberta to Cushing. If less oil flows to Cushing, this will lend support to the [West Texas Intermediate crude] price,” they added.
U.S. oil futures on Monday rose by $1.49 a barrel, or 1.6%, turning higher on the news of pipeline closures in Alberta.
The American Petroleum Institute update on U.S. commercial crude-oil inventory is due later Tuesday, and analysts polled by Platts estimated on average a decline of 2 million barrels for the week ended June 21.
The API weekly report is slated for release at 4:30 p.m. Eastern Time. A more widely watched report from the U.S. Energy Information Administration is due out on Wednesday at 10:30 a.m. Eastern.
Last week, the EIA reported an unexpected increase of 300,000 barrels in oil stockpiles to 394.1 million barrels. At that level, the EIA said, inventories were above the upper limit of the average range for this time of year.
Investors on Tuesday may also look for energy-demand clues from reports on consumer confidence in June, as well as May durable-goods orders.
Recovery in the housing sector has been key in helping the U.S. economy to mend from the financial crisis, a supportive factor for the oil market.
But the two housing reports due Tuesday will reflect action in April, before there was a spike in mortgage rates that may impact consumer activity and home buyers.
August futures for London-traded Brent crude UK:LCOQ3 +0.31% on Tuesday were up 56 cents, or 0.6%, at $101.74 a barrel, shaking off a downgrade from Credit Suisse. The bank cut its Brent forecast to $108 a barrel from a prior $112.
Meanwhile, natural gas for July delivery NGN13 +0.08% was unchanged at $3.74 per million British thermal units, and July gasoline RBN3 +0.47% rose two pennies to $2.75 a gallon.
August heating oil HOQ3 +0.37% rose 1 cent to $2.87 a gallon.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
