Oil prices ended higher on Tuesday in a volatile session as a worsening outlook for a major U.S. winter storm sparked fears that millions of Americans might curb travel plans during the holiday season.
Brent crude futures settled up 19 cents, or 0.2%, to $79.99 per barrel while U.S. West Texas Intermediate (WTI) crude futures settled up 90 cents at $76.09 per barrel.
Oil prices were buoyed by a softer dollar and a U.S. plan to restock petroleum reserves, but gains were capped by uncertainty over the impact of rising COVID-19 cases China.
A weaker dollar has also supported prices, making oil cheaper for those holding other currencies.
The Midwest and Great Lakes region could see a major blizzard beginning Thursday, while cold air moving east could bring a flash freeze caused a rapid temperature drop across the country, according to the National Weather Service.
Heating oil futures have fallen more than 4% since the start of the week to $3.03 per gallon on Tuesday.
“The storm could majorly affect travel this holiday season – I’m happy I’m not traveling,” said John Kilduff, partner at Again Capital LLC in New York.
Prices also fell on news that TC Energy Corp submitted its plan to restart the Keystone pipeline to U.S. regulators, a source familiar with the matter said, nearly two weeks after the 622,000 barrel-per-day (bpd) pipeline ruptured in the worst oil spill in the United States in nine years.
While China has been relaxing pandemic restrictions, a surge in COVID-19 cases hurt the fuel demand outlook and fed uncertainty about the country’s economic recovery, said CMC Markets analyst Tina Teng.
Cities across China have been racing to add hospital beds and build fever-screening clinics as international concern mounted that Beijing’s decision to dismantle its stringent “zero-COVID” regime could result in deaths and virus mutations.
Washington plans to buy up to 3 million barrels of oil for the Strategic Petroleum Reserve after this year’s record release of 180 million barrels.
U.S. crude oil stocks were expected to have dropped last week by about 200,000 barrels while gasoline and distillates inventories were expected to be higher, a preliminary Reuters poll showed on Monday.
The poll was conducted ahead of reports from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday. (Additional reporting by Dmitry Zhdannikov in London, Sonali Paul in Melbourne and Isabel Kua in Singapore Editing by Louise Heavens, David Gregorio and David Evans)