Oil Rises On Lower Inventories

West Texas Intermediate rose to the highest level in a month after TransCanada Corp. said it will begin operating the southern leg of its Keystone XL pipeline to the Gulf Coast in January.
Prices jumped as much as 2.4 percent, and WTI’s discount to Brent crude shrank. TransCanada will start the line Jan. 3, according to a government filing yesterday. The segment of the Keystone pipeline expansion project will move 700,000 barrels a day of crude to Port Arthur, Texas, from Cushing, Oklahoma, the delivery point for WTI futures, the filing showed.
“With the pipeline up and running, you are going to see drops in Cushing inventories,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It drives up WTI prices far more than Brent. You are going to see a narrowing of the Brent-WTI differential.”
WTI for January delivery increased $1.93, or 2.1 percent, to $95.75 a barrel at 11:49 a.m. on the New York Mercantile Exchange. The volume of all futures traded was about 51 percent above the 100-day average.

via Bloomberg

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