Oil prices soared by $4 a barrel yesterday, forcing a promise from the US government to dip into its emergency reserves after a dramatic explosion in Minnesota killed two repair workers and forced the closure of a vital pipeline from Canada that carries a fifth of American crude imports.
The price of West Texas Intermediate blend for January delivery hit $95.17 a barrel, reversing two previous days of heavy falls, and will heap more pressure on OPEC ministers meeting in Abu Dhabi next week to increase the cartel's production.
The fatal accident on the pipeline, operated by the energy transportation group Enbridge, disabled a link that carries crude oil from Saskatchewan to the Chicago area. Four separate conduits on the pipe were completely shut down for a while but two were reopened later.
The US energy department sought to reassure the oil markets by saying it had 63.5m barrels of reserves in the midwest. "Oil from the strategic petroleum reserve is available to alleviate a severe supply disruption and remains available," it said.
The repair to half of the pipeline network and the statements from the energy department soothed the market and the price of oil later fell back to $92.64. The two lines already back in operation carry 1m barrels of oil a day and analysts believe the third line, with a capacity of 450,000 barrels a day, will be back up shortly.
Lawrence Poole, an analyst with Global Insight in London, said in a research note: "Initial comments from Enbridge seem to suggest that the pipeline will not be off-line for more than a few days, and so the implications for oil supply in the US midwest should be limited."
Meanwhile, the International Energy Agency said in a report on global oil supply that although risks were rising due to growing demand, insufficient investment and a concentration of reserves, member countries should be able to cope with overall stocks of 4.1bn barrels.
Via: The Guardian| by Terry Macalister
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