Expectations of U.S. supply cut and optimism about Chinese demand stimulate oil growth

Oil continues to rise on Tuesday. The increase in oil prices is due to the shutdown of a key oil pipeline supplying the United States and high demand from China. The growing need for black gold by the world's second economy can be explained by the fact that COVID-19 restrictions in the Celestial Empire were eased.

The closure of TC Energy Keystone Corp's Pipeline has reduced supplies and raised the likelihood of destocking at Cushing's storage hub.

Keystone remains closed after the Dec. 7 Kansas leak. A timeline for a restart of the line is unknown. Its closure is expected to reduce U.S. crude oil inventories. Reports from the American Petroleum Institute (API) and the US Energy Information Administration (EIA) will be released on Wednesday.

Analysts at Bank of America expect that a successful economic recovery in China could boost demand for fuel. There are two reasons for this: the reopening of the Chinese economy after COVID-19 restrictions and the dovish pivot of the US Federal Reserve regarding the interest rate increases. All of the above could propel Brent oil prices to $90 per barrel and above.