LONDON—Oil extended gains on Tuesday on supply disruptions and as COVID-19 restrictions eased in China, the world’s largest crude importer.
Brent crude futures were up 64 cents, or 0.82 percent, to $78.63 per barrel by 1159 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 39 cents, or 0.53 percent, to $73.56.
WTI hit a low of $70.25 on Monday, close to the $70 theoretical buyback price at which U.S. President Joe Biden aimed to replenish U.S. crude stocks. This offered support on Tuesday.
Further support followed “relaxations of COVID curbs in China, the threat of lower Russian output in response to the G7 price cap, [and] an outage on the keystone pipeline in the U.S.,” said Craig Erlam, senior market analyst at OANDA.
A timetable to restart TC Energy Corp’s Keystone Pipeline, which ships 620,000 barrels per day (bpd) of Canadian crude to the United States, remains unclear after a rupture last week.
The closure has raised expectations that U.S. crude inventories will decline by 3.9 million barrels in the week to Dec. 9, according to a preliminary Reuters poll.
Reports from the American Petroleum Institute are due at 4.30 pm ET (2130 GMT) on Tuesday.
The disruption comes as export volumes from Russia’s Baltic and Black Sea ports are set to decline this month.
Investment banks Bank of America and Goldman Sachs said on Monday a successful economic reopening in China could further boost oil prices above $90 per barrel.
China has scrapped some of its strict COVID-19 curbs over the past week but surging infection rates continue to feed uncertainty.
“Inflation is high, economic growth is stuttering, global recession is looming, oil consumption is under pressure and supply is unpredictable at best,” Tamas Varga, analyst at PVM Oil Associates, said.
The market will continue to look for signals from the OPEC monthly report and the U.S. Consumer Price Index due on Tuesday. Central bank decisions on interest rates are due from the Federal Reserve on Wednesday, and the Bank of England and European Central Bank on Thursday.
