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Oil price surges after Midwest pipeline shuts down
News Articles | Sandy Shore | Associated Press | September 10, 2010
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Oil prices surged Friday after a pipeline that delivered oil to Midwest refineries was shut down, raising questions about how long the supply may be disrupted.
Benchmark oil for October delivery rose $2.20 to settle at $76.45 a barrel on the New York Mercantile Exchange.
Enbridge Energy Partners LP closed the pipeline Thursday afternoon after it began leaking in suburban Chicago. Spokeswoman Terri Larson said there is no time frame yet on when it will reopen.
She said the site is contained and crews hope to begin excavation around the pipe later Friday.
The pipe carried about 670,000 barrels per day from Superior, Wis., to Griffith, Ind.
Although oil and gasoline inventories are plentiful, traders are concerned that Midwest supplies could tighten if the pipeline stays closed for some time, analysts said. In turn, that could send retail gasoline prices up in the Midwest.
Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, speculated that Chicago-area motorists will see prices of $3 a gallon or higher. Much of that depends on how long the pipeline is shut down. A gallon of unleaded averages $2.86 in Chicago now, according to the Energy Information Administration.
In the aftermath of the BP oil spill in the Gulf of Mexico, Enbridge Energy officials likely will be “very, very deliberate” in making the repairs, Kloza said.
Enbridge Energy Partners is an affiliate of Enbridge Inc., headquartered in Calgary, Canada.
Oil prices also got an early boost from China trade figures, which showed an increase in crude imports, Tradition Energy analyst Addison Armstrong said.
The gains mirrored an increase in U.S. equities as investor concerns about slowing growth have been quieted at least partially by recent, more positive economic news.
At the pump, the national average for a gallon of unleaded regular gasoline was little changed at $2.685 a gallon, according to AAA, Wright Express and Oil Price Information Service. That’s 0.4 cent higher than a week ago and 10.9 cents above a year ago.
In other Nymex trading in October contracts, heating oil rose 3.60 cents to settle at $2.1044 a gallon, gasoline added 3.77 cents to settle at $1.9731 a gallon. Natural gas gained 11.5 cents to settle at $3.883 per 1,000 cubic feet.
In London, Brent crude rose 69 cents to settle at $78.16 a barrel on the ICE Futures exchange.
Tagged with: enbridge, oil spill, oil prices, chicago
