Singapore: Oil was steady on Tuesday near one-month highs above $77 ahead of inventory reports expected to show crude stock draws as the shutdown of the biggest Canada-US pipeline enters a fifth day.
US crude for October added 1 cent to $77.20 at 0307 GMT, after settling at a one-month high on Monday, having earlier touched an intraday peak at $78.04. That was the highest since 11 August, when prices last touched $80. ICE Brent gained 17 cents to $79.20.
Total US crude inventories probably fell by 2.3 million barrels last week, their second straight weekly drop, after the shutdown of Enbridge’s Line 6A cut imports, a Reuters poll showed ahead of weekly supply reports on Tuesday and Wednesday.
“No resumption in the Enbridge pipeline could be supportive for more days,” said Ken Hasegawa, a commodity derivatives manager at Japan’s Newedge brokerage. “Depending on how long the line is down, the market will try to break through $80 this week.”
Crude stockpiles at Cushing, Oklahoma, the pricing point for the US benchmark, have remained high for most of the summer, despite a series of drops in the past few weeks.
And the country’s total petroleum inventories climbed to a new peak of 1,143,500,000 barrels in the week to 3 September, the highest since at least 1990, when the government began issuing weekly data.
“We can expect some decrease in stocks in some regions, but still no fears of a shortage,” Newedge’s Hasegawa said. “There is plenty of surplus.”
Enbridge’s Line 6A feeds right into the heart of the Midwest’s oil network. The closure is affecting refineries in the region and storage at Cushing, where inventories fell more than 200,000 barrels to 35.54 million in the week to 3 September.
On Monday, there was still no estimate of when the troubled duct would resume shipments.
The Enbridge outage has the potential to reduce flows to Cushing by about 300,000 barrels per day (bpd), according to J.P. Morgan oil analysts, taking into account the possibility of pumping crude through alternative routes.
Line 6A was shipping 459,000 bpd when it leaked on Thursday, about two-thirds of its 670,000 bpd total capacity.
A small oil spill on Monday forced Enbridge to close a 70,000-bpd pipeline in New York State, just four days after a leak in Illinois forced the shutdown of the bigger line.
This week’s inventory reports were expected to show little change in stocks of US products. Distillates, including heating oil and diesel, rose about 300,000 barrels last week after two weeks of drawdowns, the poll showed, while gasoline inventories fell about 400,000 barrels.
The industry group American Petroleum Institute will issue its report for the week to 10 September on Tuesday, at 2030 GMT, while the US Energy Information Administration will follow with government data on Wednesday at 1430 GMT.
In other markets, the yen rose to a 15-year high on Tuesday ahead of a decisive vote in Japan, weighing on the country’s equities and leaving unclear whether a rally that has lifted global stock markets to the highest in a month can last.
The dollar was also near a one-month low against a basket of currencies after suffering on Monday its steepest fall against the euro in two months on rising risk appetite from investors.
Traders in the oil market will also pay attention to US retail sales statistics for August, due out later on Tuesday.
And in the storm front, Hurricane Igor churned westward in the Atlantic Ocean as a dangerous Category 4 storm and could strengthen even further on Monday, forecasters said. Igor was strong enough to cause catastrophic damage but posed no immediate threat to land or energy interests.