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NEW YORK, Dec 12 (Reuters) – Oil prices settled up about USD 2 a barrel on Monday on supply jitters, as a key pipeline supplying the United States closed and Russia threatened a production cut even as China’s loosening COVID-19 restrictions bolstered the fuel demand outlook.

Brent crude futures settled at USD 77.99 a barrel, gaining USD 1.89 or 2.5%. US West Texas Intermediate crude settled at USD 73.17 a barrel, rising USD 2.15, or 3%.

Last week, Brent and WTI fell to their lowest since December 2021 as investors worried a possible global recession could hurt oil demand.

The potential of a prolonged outage of TC Energy Corp’s TRP.TO Canada-to-US Keystone crude oil pipeline helped turn prices around.

“Keystone Pipeline repair appears to be taking longer than expected (and) upping the possibility of further stock draws at Cushing,” said Jim Ritterbusch at Ritterbusch and Associates.

Traders worried about how long it would take to clean up and restart the Keystone oil pipeline after more than 14,000 barrels of oil leaked last week, the largest US crude oil spill in nearly a decade.

TC Energy shut the pipeline after the spill was discovered late last Wednesday in Kansas. The company told officials in Washington County, Kansas, that they have not yet determined the cause or timeline for a restart. Officials were excavating around the 622,000 barrel-per-day Keystone line, a critical passageway for heavy Canadian crude shipped to US refiners and to the Gulf Coast for export.

The outage is expected to shrink supplies at the Cushing, Oklahoma storage hub, and delivery point for benchmark US crude oil futures.

Seven analysts polled by Reuters estimated, on average, that overall crude inventories dropped by about 3.9 million barrels in the week to Dec. 9, a preliminary Reuters poll showed.

Bank of America Global research said Brent could rebound past USD 90 per barrel on the back of a dovish pivot in the US Federal Reserve’s monetary policy and a “successful” economic reopening by China.

“China’s reopening is definitely something the market is focused on,” said Phil Flynn, analyst at Price Futures group.

China, the world’s biggest crude oil importer, continued to loosen its strict zero-COVID policy, though streets in the capital Beijing remained quiet and many businesses stayed shut over the weekend.

On Monday, queues formed outside fever clinics in the cities of Beijing and Wuhan, where COVID first emerged three years ago.

“Oil markets will likely stay volatile in the near term amid uncertainty over the impact on Russian output from the EU’s ban, headlines on China’s COVID policy, and central bank movements in the US and Europe,” UBS analysts said in a note.

Russian President Vladimir Putin said on Friday that Russia could cut production and would refuse to sell oil to any country that imposes a “stupid” price cap on Russian exports.

Saudi Arabia’s energy minister also said on Sunday that price cap measures had no clear results yet.

The number of tankers waiting to pass through Istanbul’s Bosphorus Strait fell on Monday, showing an easing of the recent build-up in traffic.

“The emergent EU embargo on Russian crude… may add moderate upside energy price risks in the next few months. But supply uncertainty should ease by spring 2023, after the embargo on oil products (on Feb.5) plays out,” Deutsche Bank said in a note.

(Additional reporting by Dmitry Zhdannikov, Florence Tan and Emily Chow in Singapore; Editing by Marguerita Choy and David Gregorio)

Dec 9 (Reuters) – Gold prices rose on Friday despite an uptick in the dollar and US bond yields as some investors still expect the Federal Reserve will slow the pace of rate hikes from early next year.

Spot gold rose 0.5% to USD 1,798.40 per ounce, as of 1907 GMT. US gold futures settled 0.5% higher at USD 1,810.70.

“The market seems to be focused on a light at the end of the tunnel, a point at which the Fed is done raising interest rates and based on that we’ve seen general support in gold,” said David Meger, director of metals trading at High Ridge Future.

A 50-basis-point rate hike is widely expected to be delivered by the Fed at its final meeting of 2022 scheduled on Dec. 13-14.

Rate hikes to fight soaring inflation raise the opportunity cost of holding zero-yield bullion.

How long this positive sentiment towards gold lasts will be dependent on how much the US central bank increases its benchmark rate by and the rhetoric of Fed Chair Jerome Powell at the post-meeting press conference, Kinesis Money analyst Rupert Rowling said in a note.

However, data showed US producer prices rose more than expected in November, adding to market uncertainty over the Fed policy outlook.

Following the data, the dollar edged up, making gold more expensive for overseas buyers, while yields on 10-year Treasury notes also gained.

Focus now shifts to the US Consumer Price Index data due on Dec. 13.

“If CPI runs hot, you might see a strong case for the Fed to deliver back-to-back half point rate increases before they pause, which might suggest gold might give back some of the gains its made over the past month,” Edward Moya, senior analyst with OANDA, said in a note.

Elsewhere, spot silver rose 1.8% to USD 23.48 per ounce, platinum climbed 2.1% to USD 1,024.00. Palladium gained 1.7% to USD 1,958.79.

(Reporting by Kavya Guduru in Bengaluru; Editing by Maju Samuel and Susan Fenton)

LONDON, Dec 9 (Reuters) – US inventories of diesel, heating oil and other distillate fuel oils are rising rapidly in response to slowing consumption and a delayed reaction to high prices.

US distillate fuel oil stocks increased by six million barrels over the seven days ending on Dec. 2, according to data from the US Energy Information Administration (EIA).

Distillate inventories have risen by a total of 13 million barrels over the eight weeks since Oct. 7 (“Weekly petroleum status report”, EIA, Dec. 7).

Distillate inventories have accumulated at a time of year when they would normally be depleting, a signal the market balance has shifted decisively.

Stocks depleted by an average of six million barrels over the same period in the ten years before the COVID-19 pandemic.

But in 2022, inventories have risen at the fastest seasonal rate since 2001, when the economy was in recession and transport had been extensively disrupted by the attack on the World Trade Centre.

Stocks are still 17 million barrels (-13% or -0.83 standard deviations) below the pre-pandemic five-year seasonal average, but the deficit has halved from 34 million barrels (-24% or -2.05 standard deviations) in early October.

In the past, increases in inventories at this time of year have been associated with high prices (2000 and 2005) or a slowdown in the business cycle (2001 and 2008) suppressing consumption.

There are signs the pattern is repeating. The volume of distillate supplied to the domestic market (a proxy for consumption) slowed to just 3.73 million barrels per day (bpd) in the four weeks to Dec. 2, the lowest since 2015.

In a sign of slowing demand from the freight sector, the number of intermodal containers hauled on US railroads in October was the lowest for the time of year since 2013, according to the US Bureau of Transportation Statistics.

Net distillate exports have slowed to around 1.0 million bpd from 1.4 million bpd in September, implying foreign consumption also slackened.

As the global business cycle decelerates, softening consumption of middle distillates in manufacturing and freight transport is starting to rebuild depleted inventories.

(John Kemp is a Reuters market analyst. The views expressed are his own; editing by Mark Potter)

Dec 9 (Reuters) – Oil prices bounced higher on Friday as closure of a major Canada-to-US crude pipeline disrupted supplies, but both benchmarks were headed for a weekly loss on worries over slowing global demand growth.

Brent crude futures were at USD 76.73 a barrel, up 58 cents, or 0.76%, at 0716 GMT, after dropping 1.3% on Thursday.

US West Texas Intermediate crude rose 52 cents, or 0.73%, to USD 71.98 a barrel, having settled 0.8% lower in the previous session.

News of an accident closing Canada’s TC Energy’s Keystone pipeline in the United States prompted a brief rally on Thursday, but prices finally eased as the market took a view that the closure would be brief. More than 14,000 barrels of crude oil spilled into a creek in Kansas, making it one of the largest crude spills in the United States in nearly a decade.

Previous spill-induced outages are typically rectified in about two weeks, RBC Capital analyst Robert Kwan said, although the latest outage may prove longer given that it involves a spill into a creek.

Oil prices are set to post their biggest weekly drop in months, since traders expect it will be some time before China easing its COVID controls feeds through to demand.

And surging infections will likely depress China’s economic growth in the next few months, bringing a rebound only later in 2023, economists said.

“The market lacks conviction in calling a bottom to crude despite the strong losing streak of the past several sessions,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Thursday’s price slump despite two major crude supply disruptions is a bit bewildering, she said.

“It is likely exacerbated by thinning trading activity, wherein the few remaining actors are playing it safe by continuing to sell and steering clear of the long side.”

Also on the downside, the US economy is heading into a short and shallow recession over the coming year, according to economists polled by Reuters who unanimously expected the US Federal Reserve to go for a smaller 50 basis point interest rate hike on Dec. 14.

The European Central Bank will also likely lift its deposit rate by 50 basis points next week to 2.00%, another Reuters poll found, despite the euro zone economy almost certainly being in recession, as it battles inflation running at five times its target.

(Reporting by Florence Tan in Singapore and Mohi Narayan in New Delhi; Editing by Bradley Perrett, Stephen Coates and Tom Hogue)

Dec 9 (Reuters) – Gold firmed just below the key USD 1,800 level on Friday as the dollar eased, with caution ahead of US inflation data and the Federal Reserve’s policy decision due next week limiting overall moves.

Spot gold was up 0.3% at USD 1,794.49 per ounce, as of 0648 GMT, but fell 0.2% this week. US gold futures rose 0.3% to USD 1,807.10.

The dollar index was down 0.2%. A weaker dollar makes gold more attractive to buyers holding other currencies.

There’s a real chance of an upward move in gold heading into next week’s Fed meet and CPI data, said Clifford Bennett, chief economist at ACY Securities.

Investors now expect a 93% chance of a 50-basis point rate hike at the Fed’s policy meeting on Dec. 13-14. The US Consumer Price Index (CPI) report for November is due on Dec. 13.

If the Fed slows the pace as per expectations, along with a relatively moderate CPI print, “then dollar might weaken and all of a sudden you could see a perfect storm rushing over gold’s horizon,” Bennett added.

Lower interest rates tend to be beneficial for bullion as they decrease the opportunity cost of holding the non-yielding asset.

Traders will care to see what the Fed has to say about the trend of inflation and where rates could peak, Edward Moya, senior analyst with OANDA, said in a note.

“Gold looks like it will find a home around the USD 1,800 level, until we have further indications.”

The number of Americans filing new claims for jobless benefits increased moderately last week, pointing to a still-tight and strong labor market despite growing fears of a recession.

Spot silver edged 0.3% higher to USD 23.15, platinum rose 0.7% to USD 1,010.30. Palladium lost 0.5% to USD 1,918.01, but was headed for second straight weekly gain.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich)