Crude Oil Increases to a Three-Week High | The Mesh Report

Crude Oil Increases to a Three-Week High

the Mesh Report Staff September 10, 2010 0

Crude oil rose to a three-week high after a pipeline that can carry more than a third of the imports shipped to the U.S. Midwest was closed.

Oil increased as much as 2.9 percent after a leak prompted Enbridge Energy Partners LP to shut its Line 6A, part of a system that can transport 670,000 barrels a day from Canada to refineries in the Midwest. Chinese customs figures showed that net imports of crude climbed by 10 percent in August from the previous month.

“It’s all about Enbridge,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “It’s a big line, which supplies a bunch of refineries in the Midwest. Depending on how long it is shut this could put a big-sized crimp on supplies in the region.”

Crude oil for October delivery climbed $2.05, or 2.8 percent, to $76.30 a barrel at 10:31 a.m. on the New York Mercantile Exchange. The contract touched $76.39, the highest level since Aug. 17. Futures are up 2.3 percent this week.

Brent crude oil for October settlement climbed 79 cents, or 1 percent, to $78.26 a barrel on the London-based ICE Futures Europe exchange.

Brent’s premium over New York oil shrank following the pipeline leak. The London-traded contract was $1.96 higher than Nymex oil, compared with a premium of $3.65 on Sept. 7.

Crews are investigating the pipeline situation, said Glenn Herchak, an Enbridge spokesman. He declined to provide information on what the line was carrying and if it was operating at full rates.

The leak occurred at Romeoville, about 30 miles (48 kilometers) southwest of Chicago. The closest refinery is Citgo Petroleum Corp.’s 170,500-barrel-a-day Lemont plant.

Canadian Exports

Canada is the largest exporter of crude oil to the U.S., sending 2.2 million barrels a day in June, according to the Energy Department. More than a quarter of that arrives by pipeline into the Chicago area.

“We’re up on worries about the pipeline,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The news out of China once again points to one bright spot in this market, growing Asian demand.”

China’s net crude purchases rose to 20.65 million metric tons from 18.8 million in July, according to preliminary data released today by the Beijing-based General Administration of Customs. Net imports of oil products doubled to 490,000 tons.

Japan’s gross domestic product grew at an annualized 1.5 percent rate in the three months ended June 30, a Cabinet Office report showed, faster than the 0.4 percent reported last month.

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