Oil prices rise after US pipeline blaze

NEW YORK—Oil prices rose Thursday, but retreated from earlier highs, after a pipeline that supplies 14 percent of domestic crude imports partially reopened following an overnight fire.
The fire late Wednesday along the Enbridge Inc. pipeline in northern Minnesota, which carries crude oil from Saskatchewan to the Chicago area, killed two workers who were repairing it, authorities said. The pipeline, which actually consists of several separate conduits, was completely shut down for a while.
But two of the four lines were restarted Thursday morning, said Larry Springer, a spokesman for Houston-based Enbridge. Another line will be inspected to see if it is safe to bring back up, but the line with the leak will likely be out for some time, he said.
“Nothing is going to be restarted until we’re absolutely sure it’s safe to be operated,” Springer said.
Light, sweet crude for January delivery rose 95 cents to $91.56 a barrel Thursday on the New York Mercantile Exchange, but that was down from an overnight high of $95.17. The gains follow two days of sharp downturns on concerns about economic growth and a view that supplies are on the rise.
The Enbridge pipelines together typically carry about 1.5 million barrels of crude a day, Springer said, which is about 14 percent of U.S. crude imports or about 7.3 percent of overall domestic oil consumption.
With some of that capacity already back online, the long-term impact on crude prices will likely be limited, analysts said.
“Initial comments from Enbridge seem to suggest that the pipeline will not be off-line for more than a few days, and so the implications for oil supply in the U.S. Midwest should be limited,” said Lawrence Poole, an analyst with Global Insight, in London, in a research note.
Other energy futures also rose Thursday. December gasoline futures added $1.86 cents to $2.2943 a gallon on the Nymex, and December heating oil rose 2.66 cents to $2.6004 a gallon.
Natural gas for January delivery fell 0.4 cent to $7.482 per 1,000 cubic feet. In London, January Brent crude rose 74 cents Thursday to $90.55 a barrel on the ICE Futures exchange.
World oil prices rebounded strongly Thursday as a fire struck a Canadian pipeline sending crude to the United States, the world’s biggest consumer of energy. Oil futures had tumbled Wednesday on a smaller-than-expected decline in US energy reserves and ahead of next week’s OPEC output meeting.
Approaching midday trade, New York’s main contract, light sweet crude for January delivery, was up a massive 3.45 dollars at 94.07 dollars a barrel. Brent North Sea crude for January surged 2.14 dollars to 91.95 dollars. Enbridge Inc said late Wednesday that an explosion in the northern US state of Minnesota forced the company to shut down four pipelines.
Enbridge’s oil pipeline system serves major refineries in Canada’s Ontario province as well as the Great Lakes region of the United States, delivering about 2.2 million barrels per day. “News of an explosion at the Enbridge Minnesota terminal will resurrect supply concerns,” said Bank of Ireland analyst Paul Harris.
In Paris, the head of the International Energy Agency, Nobuo Tanaka, said the IEA was closely “monitoring” the situation but described the incident as “not substanial.” Nevertheless, he added, “if necessary we will use our emergency measures.” Oil prices had Wednesday closed down more than three dollars in New York owing to the latest data on US energy inventories.
The US Department of Energy (DoE) said US crude inventories had fallen by 400,000 barrels in the week to November 23. Analysts had forecast a drop of 1.0 million barrels. Meanwhile stocks of distillates, which include heating fuel, shed only 100,000 barrels last week. The market forecast had been for a drop of 1.2 million.
Distillate stocks are being closely watched in the run-up to the northern hemisphere winter, when demand for heating fuel tends to soar. The DoE added that US refinery usage jumped to 89.4 percent of capacity, up 2.4 percentage points compared with a week earlier.—Agencies
“Crude futures were sharply lower yesterday, following the weekly US fuel inventories report,” Sucden analyst Michael Davies said Thursday. Oil prices are enduring great volatility since reaching almost 100 dollars a barrel last week. New York crude last week struck a record high of 99.29 dollars on concerns over tight oil supplies.