U.S. crude rose on Tuesday as market participants digested news of progress toward the opening of a major pipeline that will transport oil from the U.S. Midwest to the Gulf, helping drain crude at the pricing point for the futures contract.
West Texas Intermediate (WTI) rose over $1 earlier in the session on news that TransCanada Corp began filling a 700,000 bpd pipeline that will transport crude from Cushing, Oklahoma, to Gulf Coast refiners. The company did not say when it expects the line to begin commercial service, but a filing with the U.S. Federal Energy Regulatory Commission last week said it expects the pipeline to be in service by Jan. 3.
The news presaged further drawdowns in overall U.S. crude oil inventories for a second straight week. A Reuters poll estimated the drawdown at 2.7 million barrels in the week ended Dec. 6.
Brent traded largely flat on Tuesday after losing nearly $1 on reports of a possible end to the months-long blockade of east Libyan oil terminals.
The prospects of increased supply of Brent and less landlocked U.S. crude helped narrow the spread between the two to a month-low of $10.48 earlier in the session.
Brent crude for January reversed early gains, losing 20 cents to near $109 a barrel, after a 2 percent drop on Monday, its biggest daily loss since Nov. 1 when it fell 2.7 percent. U.S. crude futures for January delivery settled up $1.17 at $98.51 a barrel, after posting its first decline in seven sessions on Monday.
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