Oil futures: Brent tops $80.50/b on US inflation data, Keystone remains closed
Quantum Commodity Intelligence - Crude oil futures Tuesday extended the week's early gains as the Keystone pipeline remained shut, while better-than-expected US inflation data lifted prices amid hopes the worst is over for the US economy.
Front-month February ICE Brent futures were trading at $80.79/b (1935 GMT), compared to Monday's close of $77.99/b and up 6% from Friday's settlement.
At the same time, Jan23 NYMEX WTI was trading $75.56/b versus Monday's settle of $73.17/b and up 6.5% since Friday's close.
Prices were given a lift as the US consumer price index (CPI) showed an increase of 0.1% from the prior month and was up 7.1% from a year earlier, beating expectations and sending the Dollar Index crashing to a near 6-month low of around 104 points.
The CPI data precedes Wednesday's final Federal Reserve meeting of 2022, which now could apply a less aggressive interest rate hike.
Oil markets also found support as the 622,000 bpd Keystone pipeline, which remains closed with no restart date yet, is a vital conduit for transporting heavy Canadian barrels to the US, including Midwest refiners and the US Gulf Coast.
Meanwhile, China has deactivated a phone app tracking movements during the pandemic, further signalling that Beijing is abandoning its zero-Covid strategy.
"Chinese oil demand has been bottled up for three years now. And China has a huge multiplier effect on the region," Amrita Sen, director of research for Energy Aspects, told CNBC.
"China reopening will be very very bullish for oil markets. Now, again, not expecting that to be overnight, but over the course of next year, this is going to be probably the single biggest driver of oil prices," she added.
Officials across China are on high alert for an unprecedented wave of Covid-19 cases as it dismantles the zero-Covid policy, which market watchers say could delay any immediate boost to the economy.
OPEC+
On the downside, OPEC+ production remains troublesome for the alliance as a second survey found a significant miss in its attempts to rein in production last month, cutting just 300,000 bpd of the announced 2 million bpd.
In the US, a rise in Permian production drove US shale oil output to a three-year high in November, with forecasts showing output set to rise above pre-Covid levels for the first time this month.
Meanwhile, Bank of America said in its latest forecast that a successful economic boost in China, along with a dovish pivot by the US Federal Reserve on its interest rate increases, could lift Brent oil prices above $90/b.
"In sum, Brent may need a Fed pivot and a successful China reopening to turn the corner, but prices could bounce up quickly above $90/b if these two conditions are met, especially now that spec positioning has turned neutral," said BoA.
The recent buildup in traffic in the Black Sea eased on Monday, as the number of tankers waiting to pass through Istanbul's Bosporus on the way to the Mediterranean fell to 13 from 17 a day earlier, reported Turkey's Daily Sabah, citing shipping agency data.
