Oil Surges After Enbridge Pipeline Explosion Cuts U.S. Supplies By Grant Smith and Eduard Gismatullin
Nov. 29 (Bloomberg) -- Oil surged more than $4 a barrel, the most in a month, after an explosion cut Canadian oil shipments through Enbridge Inc. pipelines that typically provide about 15 percent of U.S. crude imports. The blast yesterday killed two workers and initially closed four pipelines that supply U.S. refiners with an average 1.5 million barrels a day. Two of those have now reopened and a fire near the Clearbrook terminal in Minnesota where the pipelines meet has been extinguished, Enbridge said today. ``It is a major incident with major supply issues in an important area,'' said Paul Horsnell, head of commodities research at Barclays Capital in London. ``It will put pressure on prompt demand in the Midwest,'' of the U.S. Crude oil for January delivery gained as much as $4.55, or 5 percent, to $95.17 a barrel in electronic trading on the New York Mercantile Exchange, the biggest gain since Oct. 31. The contract, which rose for the first time this week, traded at $93.32, up $2.70, at 12:11 p.m. London time. ``At least one or two lines will be shut down for quite sometime,'' Denise Hamsher, a spokeswoman for Calgary-based Enbridge, said today by telephone. Brent crude oil for January settlement climbed as much as $3.01, or 3.4 percent, to $92.82 a barrel on the London-based ICE Futures Europe exchange. The contract pared gains to trade at $91.56 a barrel at 12:11 p.m. in London. Snaps Slide Today's rise snaps a 7.7 percent slide in the first three days of the week, driven by signs that the Organization of Petroleum Exporting Countries is raising production and may increase output further. Crude touched a record high of $99.29 in New York on Nov. 21. ``It's an important pipeline and it's also where it's being hit, these pipeline junctions are a nightmare,'' said Rob Laughlin, a senior broker at MF Global Ltd. in London. Oil ``could go up further if it's shut for some time.'' Enbridge's pipelines typically feed 1.5 million barrels a day of crude to refineries including BP Plc's plant in Whiting, Indiana, and plants in the U.S.'s refining heartland on the Gulf Coast. The U.S. imported 10.3 million barrels a day last week. U.S. crude oil stockpiles fell 452,000 barrels to 313.2 million last week, the Energy Department said yesterday. Oil inventories in Cushing, Oklahoma, the delivery point for the U.S. benchmark grade, were at 15.2 million barrels as of Nov. 23, the lowest since October 2005. The Enbridge blast threatens ``a lot of crude, but U.S. crude stocks are comfortably mid-range,'' said Mike Wittner, head of oil research at Societe Generale SA in London. ``Based on past experience, pipelines are normally repaired in a matter of days, not weeks, and certainly not months.'' Two Lines Reopen The leak and explosion occurred at the No. 3 pipeline, which was undergoing maintenance, according to Enbridge. The No. 1 and No. 2 pipelines have now reopened. U.S. refineries operated at 89.4 percent of capacity, the highest since the week ended Sept. 14, the energy department said. Refiners usually start in November units that were shut during the previous two months for repairs after the summer driving season ends and before demand for heating oil picks up. Qatar's oil minister yesterday refuted reports that OPEC plans to raise oil output when it meets next week in Abu Dhabi, as the market is well-supplied and OPEC members are providing all they can. To contact the reporter on this story: Eduard Gismatullin in London at [EMAIL PROTECTED] Grant Smith in London at [EMAIL PROTECTED] Last Updated: November 29, 2007 07:22 EST
