SINGAPORE- Oil prices rose in Asian trade Thursday after stockpiles declined at a key US trading hub, indicating stronger demand, and on news of a major pipeline expansion in the United States.
New York’s main contract, West Texas Intermediate (WTI) for April delivery, rose 13 cents to $100.50 in mid-morning trade and Brent North Sea crude for May gained 29 cents to $106.14.
The US Department of Energy (DoE) report showed supplies at the Cushing, Oklahoma trading hub fell by 200,000 barrels to 29.8 million.
Inventories at Cushing are expected to further ease after a key pipeline expansion that will facilitate the distribution of supplies from the depot comes into operation in the next few months.
Enterprise Products Partners announced it would more than double the capacity of its Seaway Pipeline to about 850,000 barrels per day by May or June.
EPP operates the pipeline, a 50-50 joint venture with Enbridge Inc.
“An announcement in the US on the potential expansion of a seaway pipeline that will double its capacity to move oil led to an increase in WTI prices,” said Sanjeev Gupta, head of the Asia Pacific oil and gas practice at Ernst & Young.
Brent crude is still being influenced by the crisis in Ukraine’s Crimea peninsula which was absorbed by Russia despite strong protests from Kiev and from Western powers led by the US.
The pipeline expansion and the tensions in Crimea overshadowed remarks by US Federal Reserve chief Janet Yellen hinting that the central bank could raise interest rates earlier than expected.
Yellen’s comments, which took the markets by surprise, led to a decline in Asian stock equities on Thursday.
The Fed also decided at the end of a two-day policy meeting to further trim its stimulus programme by $10 billion to $55 billion month, as expected.