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Oil up above US$77 on US crude pipeline leak
Source: Agencies |
September 14, 2010, Tuesday
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Online Edition
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OIL prices jumped above US$77 a barrel yesterday, extending gains for a second trading day after a leak forced the closure of a Chicago-area oil pipeline and disrupted supplies to U.S. Midwest refineries.
Benchmark crude for October delivery added 74 cents to settle at US$77.19 a barrel on the New York Mercantile Exchange. In London, Brent crude rose 87 cents to settle at US$79.03 a barrel on the ICE Futures exchange.
In other Nymex trading in October contracts, heating oil rose 1.83 cents to settle at US$2.1227 a gallon and gasoline added less than a penny to settle at US$1.9806 a gallon. Natural gas gained 5.5 cents to settle at US$3.938 per 1,000 cubic feet.
Repair crews are closing in on the source of a leak but haven't found it yet, Sam Borries, on-scene coordinator for the U.S. Environmental Protection Agency, said Sunday. The 670,000 barrel per day pipeline run by Enbridge Energy Partners carries crude from Canada to the upper Midwest, and the supply disruption has caused a sharp spike in gas prices across that region.
"Markets tend to push higher amidst uncertainty in the process of discounting a worst case scenario until definition is forthcoming," Ritterbusch and Associates said in a report. "We still view a significant selloff as likely once the pipeline problem is resolved."
Oil traders took heart from accelerating Chinese industrial production, a sign the world's second-largest economy is expanding. Manufacturing rose 13.9 percent in August from a year ago, faster than the 13.4 percent growth pace in July, China said over the weekend.
"The market sentiment has strongly improved, while solid gains in the global equity markets provide further support to the oil prices," said a report from Sucden Financial Research in London, adding that the pipeline closure could push prices toward US$80 a barrel.
Analysts at Commerzbank in Frankfurt noted that more funds from money managers were going into long positions in oil futures - after four straight weeks of position reductions - a sign that investors expected oil prices to rise.
A weaker dollar also contributed to rising oil prices by making crude cheaper for investors holding other currencies.
Benchmark crude for October delivery added 74 cents to settle at US$77.19 a barrel on the New York Mercantile Exchange. In London, Brent crude rose 87 cents to settle at US$79.03 a barrel on the ICE Futures exchange.
In other Nymex trading in October contracts, heating oil rose 1.83 cents to settle at US$2.1227 a gallon and gasoline added less than a penny to settle at US$1.9806 a gallon. Natural gas gained 5.5 cents to settle at US$3.938 per 1,000 cubic feet.
Repair crews are closing in on the source of a leak but haven't found it yet, Sam Borries, on-scene coordinator for the U.S. Environmental Protection Agency, said Sunday. The 670,000 barrel per day pipeline run by Enbridge Energy Partners carries crude from Canada to the upper Midwest, and the supply disruption has caused a sharp spike in gas prices across that region.
"Markets tend to push higher amidst uncertainty in the process of discounting a worst case scenario until definition is forthcoming," Ritterbusch and Associates said in a report. "We still view a significant selloff as likely once the pipeline problem is resolved."
Oil traders took heart from accelerating Chinese industrial production, a sign the world's second-largest economy is expanding. Manufacturing rose 13.9 percent in August from a year ago, faster than the 13.4 percent growth pace in July, China said over the weekend.
"The market sentiment has strongly improved, while solid gains in the global equity markets provide further support to the oil prices," said a report from Sucden Financial Research in London, adding that the pipeline closure could push prices toward US$80 a barrel.
Analysts at Commerzbank in Frankfurt noted that more funds from money managers were going into long positions in oil futures - after four straight weeks of position reductions - a sign that investors expected oil prices to rise.
A weaker dollar also contributed to rising oil prices by making crude cheaper for investors holding other currencies.
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