Brent crude futures were up by 64 cents (0.8 percent) to $78.63 and the US West Texas Intermediate by 64 cents (0.9 percent) per barrel on Tuesday amid tight supply and hopes for a higher demand.
It is the second consecutive day of upward movement as Keystone Pipeline, which ships about 620,000 barrels per day of Canadian crude from Alberta to the United States, remained closed after a leak.
Meanwhile, the loosening Covid restrictions in Mainland China – the second-biggest user globally – and Hong Kong is fueling the hope that the move will boost demand.
The closure of TC Energy Corp’s Keystone Pipeline has tightened supplies and raised the prospect that inventories at the Cushing, Oklahoma, storage hub will decline. Cushing is also delivery point for the WTI crude futures contract.
Keystone has remained shut since a 14,000-barrel leak in the US state of Kansas was reported on Dec 7. TC Energy has not released a timeline for a restart of the line, which carries crude to refineries in the Midwest and Gulf Coast.
Expectations are that the pipeline closure will cause US crude inventories to decline. Analysts estimate that stockpiles dropped by 3.9 million barrels in the week to Dec 9.
The poll was conducted ahead of reports from the American Petroleum Institute on Tuesday, and the Energy Information Administration, the statistical arm of the US Department of Energy, due on Wednesday.
Analysts from Bank of America expect that a successful economic reopening in China from its Covid-19 restrictions, combined with a dovish pivot by the US Federal Reserve on its interest rate increases, could boost fuel demand and propel Brent oil prices above $90 a barrel.