WTI crude closes on Brent after pipeline spill

US oil prices continued to close the gap on benchmark Brent crude on Friday following news on Thursday of an outage at the Keystone pipeline.

The pipeline, owned and operated by TransCanada Corporation, runs crude oil from the Canadian sedimentary basin to refineries in Illinois and Texas and ruptured last week, spilling 200,000 gallons of crude in South Dakota.

Damage caused by the rupture may mean the pipeline could be closed for several weeks.

Market reaction

The news caused Nymex West Texas Intermediate (WTI), the US crude benchmark, to climb 1.1% to $58.63 a barrel - its highest level since July 2015.

WTI is now closing the gap on Brent crude, currently the global crude benchmark, which was up just 0.17% to $63.65 a barrel. The spread is now down to $5.02 - its lowest since August.

South Dakota regulators, pending an investigation into spill, could revoke the permit for the pipeline if the company was found to have violated the terms of its licence.

TransCanada has said it could take weeks to clean up the spillage and make necessary repairs to the pipeline and that November deliveries through the pipeline would be cut by around 85%.

US crude inventories

US crude oil inventories fell by 1.855 million barrels last week, according to data from the US Energy Information Administration (EIA), the same as in the previous week, but missing expectations of a 2.167 million-barrel drawdown.

The drawdown recorded by the EIA was significantly less than that recorded by the American Petroleum Institute, which on Tuesday suggested US crude inventories had fallen by more than 6 million barrels in the previous week.