By Adedapo Adesanya
Supply jitters sent prices of crude oil up by about 3 per cent on Monday, with Brent appreciating by 2.5 per cent or $1.89 to $77.99 per barrel and the United States West Texas Intermediate (WTI) growing by 3.0 per cent or $2.15 to $73.17 a barrel.
The market, after plunging heavily last week, witnessed a change in fortune as the prolonged outage of TC Energy Corp’s Canada-to-US Keystone crude oil pipeline helped turn prices around.
Traders worried about how long it would take to clean up and restart the Keystone oil pipeline after more than 14,000 barrels of oil leaked last week, the largest US crude oil spill in nearly a decade.
The company shut the pipeline after the spill was discovered on Wednesday in Kansas. The company also told officials in Washington County, Kansas, on Monday that they have not yet determined the cause and that they started excavating around the pipeline.
The affected segment of the line cannot resume operation until regulators approve a restart plan in its entirety, according to the US Department of Transportation.
The outage is expected to shrink supplies at the Cushing, Oklahoma, storage hub and delivery point for benchmark US crude oil futures.
Support also came from China’s reopening as the world’s largest oil importer continued to loosen its strict zero-COVID policy, though streets in the capital Beijing remained quiet and many businesses stayed shut over the weekend.
Although the government on Wednesday loosened key parts of its strict “zero-COVID” policy that has kept the pandemic largely at bay for the past three years, many are not optimistic about normalcy.
Analysts also warned that the oil markets would likely stay volatile in the near term amid uncertainty over the impact on Russian output from the European Union (EU) ban.
Russian President Vladimir Putin threatened last week that Russia could cut production and refuse to sell oil to any country that imposes a “stupid” price cap on Russian exports.
Saudi Arabia’s energy minister also said on Sunday that price cap measures had no clear results yet.
Modupe Gbadeyanka