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29 Nov 2007 08:32
Oil prices rebounded by over $1 a barrel on Thursday, after an explosion and fire at an oil terminal in Minnesota shut down most of the main pipeline that delivers Canadian crude to United States Midwest refineries.
US crude rose by $1,11 to $91,73 a barrel by 4.35am GMT, recouping some of the previous session’s loss of $3,80, or 4%.
Brent crude climbed 96 cents to $90,77 a barrel.
Enbridge said it had shut down on Wednesday, four of its main pipelines near its Clearbrook, Minnesota, terminal that supply over two million barrels per day (bpd) of Canadian oil to the US Midwest due to the explosion and fire.
The company did not give further details about the total line capacity that had been shut down and said it was unable to say when the line might be able to restart, while a county official said the fire may burn for three days.
“This is a fast reaction to the accident, and it will be good news for bull players,” said Tetsu Emori, fund manager at Astmax Futures.
“Oil prices may rise further if the accident is proven as a big supply disruption.”
The incident partially offset the impact of a smaller-than-expected drop in US crude and distillate inventories, which had eased concern about supply in the world’s largest consumer and pushed prices into the biggest decline since August 6.
US crude stocks fell 400 000 barrels last week, less than half of what analysts had expected, as imports offset higher demand from the nation’s refineries, the Energy Information Administration said.
Crude stockpiles in Cushing, Oklahoma,—the delivery point for US crude futures—rose 600 000 barrels over the same period, the EIA said.
But traders said expectations that Opec might increase output when it meets next week in Abu Dhabi might drive down oil prices again.
A Reuters poll of 21 banks, funds, consultants and traders showed a majority expecting Opec to increase output by at least 500 000 bpd when its ministers meet on December 5.
Top Opec Gulf officials have expressed concern about oil’s record run, but insist supplies are sufficient and do not support prices near $100.
“We observe with great concern the recent escalation of oil prices,” Saudi Oil Minister Ali al-Naimi told a regional energy conference in Singapore on Wednesday. “But we believe that the world market is well supplied and petroleum inventories are comfortable,” he said, blaming a weak dollar, geopolitical tensions and speculators for the rise.
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