The price of oil surged above US$97 a barrel Wednesday on expectations US crude stockpiles fell.
Benchmark US crude for January delivery was up US$1.16, or 1.2 per cent, to US$97.20 a barrel at mid-afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract rose US$2.22 to US$96.04 on Tuesday after TransCanada said the southern leg of its Keystone XL pipeline should be operational early next month.
The pipeline would move oil out of Cushing, Oklahoma, the physical delivery point for futures on US benchmark oil, to Port Arthur, Texas. That should lead to greater demand for the oil, which costs less than the crudes imported into the Gulf region.
Analysts said the US energy department is expected to report Wednesday a fall in crude supplies after 10 consecutive weeks of gains, which might point to stronger demand.
US stockpiles data for the week ended November 29 is expected to show a decline of 1.25 million barrels in crude oil stocks and an increase of 2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Investors are also looking to a meeting of the Organization of Petroleum Exporting Countries in Vienna on Wednesday for an update on production levels. OPEC is expected to keep intact its daily output target of 30 million barrels a day, although the group may come under pressure to reduce production if some supply sources currently experiencing disruptions return to normal.
Brent crude, a benchmark for international oils, rose 24 cents at US$112.86 a barrel on the ICE exchange in London.
