The increased capacity will allow more crude to the Gulf Coast from the Cushing, Oklahoma delivery point for the US oil futures contract, where a glut of oil from rising Canadian and US flows has depressed domestic prices relative to coastal and international prices.
Further support for US crude came after President Barack Obama and Republican House Speaker John Boehner met for talks to resolve the US budget crisis. Equities markets also rose on the optimism around the discussions, which have held sway over oil markets for weeks amid trader concern failure to reach a deal could cause a recession and damp fuel demand.
"Hopes for a budget deal have the equities market putting in a good day and US crude has followed along," said Addison Armstrong at Tradition Energy in Stamford Connecticut, adding the "outlook for pretty weak economies in Europe have helped limit Brent." Brent crude oil futures dipped 54 cents to settle at $107.64 a barrel on Monday, in spread trading that saw the international benchmark's premium to US crude narrow by nearly $1 a barrel.
Brent hit a 2012 high of $128 in March and is on course to end the year little changed in percentage terms as economic worries have countered price-supporting supply disruptions in the Middle East and other regions such as the North Sea. Front-month US crude oil futures rose 47 cents to settle at $87.20 a barrel on Monday with prices finding some resistance after briefly topping the 50-day moving average at $87.66 a barrel.
Tempering enthusiasm about the US economy, the New York Federal Reserve said in a report released on Monday that manufacturing in New York State declined for a fifth straight month in December and the labour market remained weak. US gasoline futures edged up slightly on news Motiva Enterprises suspended the restart of its 325,000 barrel-per-day crude unit at the Port Arthur, Texas, refinery after a small fire on Monday. Sources familiar with the plant said the unit was not being shut down, as it was after a small fire last week, but that the process of gradually increasing production rates had been paused.