LONDON, Dec 13 (Reuters) – Oil pared gains after rising by over $1 earlier in the session, as declining optimism over a Chinese oil demand recovery capped support from supply disruptions.
Brent crude futures were up 62 cents, or 0.79%, to $78.61 per barrel by 1226 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 34 cents, or 0.46%, to $73.51.
Prices rose by over $1/bbl earlier in the session but eased after Chinese leaders reportedly delayed a key economic policy meeting, amid surging COVID-19 infections.
China had scrapped some of its strict COVID curbs over the past week, boosting expectations of oil demand growth from the world’s biggest crude importer.
“But now there is some concern of a policy U-Turn,” UBS oil analyst Giovanni Staunovo said.
The market continued to see some support as a timetable to restart TC Energy Corp’s (TRP.TO) Keystone Pipeline, which ships 620,000 barrels per day (bpd) of Canadian crude to the United States, remains unclear after a rupture last week.
The closure has raised expectations that U.S. crude inventories will decline by 3.9 million barrels in the week to Dec. 9, according to a preliminary Reuters poll.
Reports from the American Petroleum Institute are due at 4.30 pm ET (2130 GMT) on Tuesday.
Further support followed “the threat of lower Russian output in response to the G7 price cap” said Craig Erlam, senior market analyst at OANDA.
Export volumes from Russia’s Baltic and Black Sea ports are set to decline this month.
“Inflation is high, economic growth is stuttering, global recession is looming, oil consumption is under pressure and supply is unpredictable at best,” Tamas Varga, analyst at PVM Oil Associates, said.
The market will continue to look for signals from the OPEC monthly report and the U.S. Consumer Price Index due on Tuesday. Central bank decisions on interest rates are due from the Federal Reserve on Wednesday, and the Bank of England and European Central Bank on Thursday.