ENB U.S.Pipeline DamageSAn indication of U.S.reliance of Can. oil imports.
Crude Oil Surges After Explosion at Enbridge's Pipeline to U.S.
By Eduard Gismatullin and Grant Smith
Nov. 29 (Bloomberg) -- Oil surged more than $4 a barrel, the most in a month, after an explosion at an Enbridge Inc. pipeline from Canada to the U.S. cut supply to the world's largest energy user.
Enbridge closed four pipelines, with a combined capacity of 1.5 million barrels a day, that meet at its Clearbrook, Minnesota, terminal after a blast yesterday killed two workers. The company said today the fire was still burning.
``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.''
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. That's the biggest gain since Oct. 31. The contract, which gained for the first time this week, traded at $94.17 at 9:29 a.m. in London.
``All our lines are shut down until we can safely start up the system,'' Enbridge spokeswoman Denise Hamsher said today by telephone. ``At least one or two lines will be shut down for quite sometime.''
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 traded at $91.99 a barrel at 9:29 a.m. in London.
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, were at 152.3 million barrels as of Nov. 23, the lowest since October 2005.
`Huge Reaction'
This oil is ``pumping into the Midwest, into Cushing,'' where the New York-traded contract is priced, said Edo Gerbrands, a trader with Fortis Bank in Brussels. ``Stocks, which are pretty low at the moment, will get lower. Therefore, we see this huge reaction today.''
The leak and explosion occurred at the No. 3 pipeline, which was undergoing maintenance, according to Enbridge.
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.
The Organization of Petroleum Exporting Countries has no plan to raise oil output when it meets next week in Abu Dhabi because the market is well supplied, Qatar's oil minister said yesterday.
Libya's top oil official, Shokri Ghanem, said OPEC is already producing all the oil that it can sell and is left with ``no big room'' to increase output further.
``OPEC is selling to anybody who wants to buy, it is doing all it can,'' Ghanem, who heads Libya's National Oil Corp., said in an interview yesterday.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
Last Updated: November 29, 2007 04:30 EST
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