US oil rises to highest level this year on new pipeline

NEW YORK, Jan 23 (Reuters): Oil rose more than a dollar on Wednesday to settle at its highest price this year on the startup of a new major pipeline, expected to help eliminate a bottleneck that has depressed the US futures for three years, and on expectations that frigid weather in the Northeast would prompt strong demand for heating fuel.
TransCanada Corp said it has begun to ship crude oil on its 700,000 barrel per day (bpd) pipeline, which flows from Cushing, Oklahoma, the pricing point for the New York Mercantile Exchange's West Texas Intermediate (WTI) contract, to Gulf Coast refiners. The company expects to transport an average 525,000 bpd in the first year of service.
"As they work up toward full capacity and the market begins to adjust to the additional supply of the refining centers, then we're going to see a narrowing between WTI and Brent," said Joseph Arsenio, owner of Arsenio Capital Management in Larkspur, California.
US oil's discount to Brent narrowed to $11 in intra-day trade before tightening by 22 cents to settle at $11.54, the smallest discount since Dec. 19.
Brent oil for March settled up $1.54 at $108.27 per barrel, the highest settlement since Dec. 31. US crude oil futures rose $1.76 to settle at $96.73, also the highest settlement since the last day of 2013.
Brent got an additional boost from the International Monetary Fund (IMF), which predicted higher growth in advanced economies, while China's central bank injected liquidity into money markets to ease bank-to-bank lending in the world's second-largest oil consumer.