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US oil rallies on upbeat Seaway pipeline reports

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(GlobalPost/GlobalPost)

US oil prices gained Tuesday as traders digested news of an easing chokepoint on the key Seaway pipeline serving Gulf Coast refineries.

A barrel of West Texas Intermediate (WTI) settled at $96.66 on the New York Mercantile Exchange, up 80 cents.

In London, a barrel of European benchmark Brent crude settled at $117.52 on the Intercontinental Exchange, 14 cents higher.

The New York session was lackluster after traders came back to work following a long weekend. US markets were closed Monday for a public holiday.

Some analysts said trading volume remained thin because of a major gathering this week of oil traders in London.

WTI spent much of the morning near the break-even line, but picked up support later in the session as the S&P 500-stock index held onto gains.

"We were pretty much trading flat," said Carl Larry, a broker with Atlas Commodities, who cited the jump in equity markets as a factor in the oil rally.

Also lifting oil prices were media reports that the Seaway pipeline, which has been troubled by distribution problems of late, plans to pump 295,000 barrels a day between late February and the end of May.

The news on Seaway is "bullish" because Seaway's flow has at times fallen below 200,000 barrels a day, said Dominick Chirichella, an analyst of the Energy Management Institute.

Seaway has been seen as a critical component in addressing a glut of oil at the bottlenecked US hub in Cushing, Oklahoma. The pipeline's capacity was recently expanded to 400,000 barrels a day from 150,000 barrels, but the operator has encountered technical problems that have limited the volume.

"I don't think there's been one silver bullet" driving Tuesday's rally in oil prices, Chirichella said. "Just a lot of little things."

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http://www.globalpost.com/dispatch/news/afp/130219/us-oil-rallies-upbeat-seaway-pipeline-reports