Plains All American Pipeline LP on Aug. 3 raised its forecast for 2021 adjusted core income, as the oil and gas sector benefits from easing travel curbs and a recovering economy firing up fuel demand.

The pipeline company also trimmed its 2021 investment capital estimate by about $50 million to $325 million, mainly because the Byhalia Connection construction project was scrapped last month after the pandemic hit U.S. oil production.

Plains forecast adjusted EBITDA is about $2.175 billion, $25 million higher than its prior outlook.

Improved crude oil demand boosted volumes for the company and drove a 25% increase in its transportation segment's adjusted EBITDA in the second quarter. Deficiency payments—or penalties paid by producers for not shipping oil—also helped the pipeline operator.

The transportation segment is expected to bring in adjusted EBITDA of about $1.635 billion in 2021 versus an earlier estimate of $1.58 billion.

Average daily volumes on the company's pipelines rose 5.6% to 6.2 million barrels per day (MMbbl/d) in the reported quarter, compared with last year.

The higher volumes transported reflect a steady recovery in the oil and gas industry as a rebound in fuel demand from pandemic lows encourages companies to bring back shut production.

Global crude supply and demand will continue to rebalance, CEO Willie Chiang said during an earnings call with analysts.

Plains also raised its 2021 forecast for free cash flow after distributions to about $1.35 billion from a previous outlook of $1.315 billion.