Singapore: Oil was steady above $89 on Tuesday, paring early gains on expectations that the Trans Alaska Pipeline would resume flows equivalent to 12% of US crude output within a few days.
US crude for February gained 16 cents to $89.41 a barrel by 1:00pm, after trading as high as $89.67 at the start of the trading session. Front-month ICE Brent crude shed 12 cents to $95.58.
The pipeline is planned to reopen later this week, officials said on Monday, after halting shipments on Saturday because of a leak that forced producers in Alaska’s Prudhoe Bay region to cut output by about 600,000 barrels to just 5 percent of normal levels.
“The near-term outlook for prices will depend on whether the pipeline can be restored by the end of the week,” said Credit Suisse analysts including Stefan Graber.
“We think oil prices will ease once the pipeline in Alaska is repaired and restarted.”
A bypass line at the affected area would allow the duct’s operator, Alyeska Pipeline Service Co, to restart the system. Past shutdowns of the 800-mile (1,280 kilometre) line have generally been short-lived, and tanker shipments from Alaska’s Valdez port have not yet been hit.
U.S. crude oil inventories probably rose by 400,000 barrels last week as imports rebounded, in what would be the first gain in six weeks, according to a preliminary Reuters poll before the release of weekly inventory reports.
In the previous five weeks, crude inventories had tumbled more than 24 million barrels, the biggest five-week drop since June 2008, as refiners, in their usual year-end practice, used more of their stored supplies and tried to hold down imports to lower their taxes for 2010.
Distillate stocks, which include heating oil and diesel, may have increased 1.3 million barrels for their third straight weekly gain, while gasoline stocks probably rose 2.8 million barrels, the survey showed.
Industry group the American Petroleum Institute will publish inventory statistics on Tuesday at 2130 GMT, while the US Energy Information Administration will follow with government figures on Wednesday at 9:00pm.
China’s crude oil imports rose 17.5% to a record 4.79 million bpd in 2010 from a year ago, official data showed on Monday, but the growth may slow this year as fewer new refineries come onstream.
In other markets, the euro languished near a four-month low on Tuesday after a brief rally triggered by a Japanese plan to buy euro bonds, while Asian stocks drifted, fearful of Portugal becoming the next casualty of the euro zone’s debt crisis.
US crude prices reached a 27-month high of $92.58 last week on expectations that a sustained economic recovery would boost energy demand from both emerging markets and industrialised nations.