Crude on the Nymex rose for the second consecutive day on Tuesday, on increased buying amid prospects of an earlier-than-expected reversal of the Seaway pipeline to help ease the glut of oil in the Midwest, as per Reuters. As per the Federal Energy Regulatory Commission, the Seaway Pipeline will begin moving oil from Cushing, Okla. to the Gulf Coast around May 17. Analysts and investors were expecting it to come online later in June. Reducing the amount of oil supplies in the Midwest will push the price of WTI closer to the international benchmark. The Seaway Pipeline is expected to initially transport 150,000 barrels of oil per day. That capacity will grow as high as 500,000 bpd in 2013. Crude for May delivery on the Nymex settled at US$104.2 a barrel. Other factors supporting oil were a well-received Spanish debt auction, upbeat German economic sentiment and higher global economic growth forecast by the IMF were also supportive for crude. The International Monetary Fund said in its latest World Economic Outlook that the global economy was on track to expand this year by 3.5% and by 4.1% in 2013, up slightly from the 3.3% and 3.9% GDP output, respectively, that it had forecast in January. Direction will be guided after release of weekly petroleum inventory report from the American Petroleum Institute followed by the US Energy Information Administration report.
In other news, U.S. President Barack Obama proposed new measures that would raise civil and criminal penalties for individuals and companies involved in oil market manipulation. Also proposed was Congress give the Commodity Futures Trading Commission authority to require traders to increase their margins, or collateral, when trading in oil futures.
Brent crude fell by 3% to US$118.6 as tensions eased over Iran's nuclear program. Iran discussed its nuclear ambitions with the U.S. and five other countries at a weekend meeting in Istanbul. The meeting didn't produce any concrete agreements, but analysts said the potential of fighting in the Persian Gulf goes down as long there are negotiations. Both sides agreed to meet again on May 23, as per Business Week.