Oil prices rose on Tuesday, lifted by the closure of a pipeline carrying Canadian crude to the United States and a decline in the dollar on new hopes for a debt bailout for Greece. TransCanada Corp shut its 591,000 barrel per day (bpd) Keystone crude oil export pipeline over the weekend, for the second time in less than a month, due to a small leak in Kansas.
The company had no estimate for when the pipeline, which runs from Alberta to the Cushing, Oklahoma delivery point for the US oil futures contract, would be restarted. "In case of a longer disruption, we might see a noticeable crude stock draw in Cushing in next week's US inventory reports," said JBC Energy in a note. Adding to the crude supply problems, storm-related power outages shut down a number of Enbridge Inc's oil pipelines in the US Upper Midwest, although throughput was being restored on Tuesday, the company said.
Brent crude for July delivery rose $1.79 to $116.47 a barrel by 1:09 p.m. EDT (1709 GMT), after edging back from an earlier $117.16 intraday peak. US July crude rose $1.55 to $102.14 a barrel, having moved above its 20-day moving average of $100.76. Despite Tuesday's rally, both crude oil contracts were on pace to end lower for the month, following a commodities sell-off earlier in May.
Crude oil trading volumes on Tuesday after midday in New York looked likely to end the day below the 30-day averages. The euro rose to a three-week high against the dollar as the European Union stepped up efforts to draft a second bailout package for Greece. Oil's gains came despite disappointing reports showing falling US home prices, a drop in US consumer confidence in May and much slower growth than expected in the US Midwest.
US gasoline and heating oil futures rose as their June contracts approached expiration at the end of the day's trading session. Oil prices also received lift from the end of a truce between tribal groups and forces loyal to Yemen's President Ali Abdullah Saleh. Street fighting raged across the Yemeni capital after the breakdown of the truce, edging the Arab country that borders Saudi Arabia closer to civil war.
South African President Jacob Zuma made little headway towards brokering a Libya peace deal in talks on Monday with Muammar Qadhafi, who is adamant he will not leave Libya. "The dollar and the geopolitical concerns had crude up, but the (Midwest business activity) and consumer confidence data took away some of the momentum," said Phil Flynn, analyst at PFGBest Research in Chicago, commenting on oil's choppy trajectory on Tuesday. The developments in Yemen and the ongoing conflict in Libya will keep the recent turmoil in North Africa and the Middle East in focus as Opec oil ministers gather in Vienna in early June.
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