Oil prices soared well over US$60 a barrel on Wednesday as a rash of snags affecting U.S. oil refineries, pipelines, and an oil field sparked worries of a supply crunch in the world's biggest energy consumer.U.S. crude jumped $1.60 to US$60.45 a barrel in mid-afternoon, while London Brent was up $1.75 to US$59.73 a barrel.
"Prices jumped here on refinery and pipeline issues," said Kyle Cooper, director for research at IAF Advisors.
A key fuel pipeline supplying the U.S. Northeast with gasoline and diesel was shut down due to a spill in Indiana, the line's operator TEPPCO said on Wednesday, pushing up fuel prices in the region.
Meanwhile, a fire over the weekend at Valero Energy Corp.'s oil refinery on the Texas panhandle was expected to leave the plant shut for several weeks, cutting back fuel production roughly 170,000 barrels per day, the company said.
The outage comes amid a raft of other refinery problems in North America, including a recent fire at Imperial Oil's plant in Nanticoke, Ontario, that have raised worries of a crunch when driving demand picks up this spring. Adding support to prices, oil major BP said it shut its Northstar oil field in the Beaufort Sea off Alaska for unplanned repairs that could keep it out of service until next week. The field has a capacity to produce nearly 50,000 barrels of oil per day.
A roller-coaster seven months have taken U.S. oil prices from a record $78.40 last July to a 20-month low of $49.90 in January when unusually mild weather and a speculative fund sell-off dragged the market lower.
Since then rising political tension involving Middle Eastern and African oil producers and reduced output from the Organization of the Petroleum Exporting Countries have provided some support for prices.
OPEC member Iran, the world's fourth biggest oil exporter, vowed Wednesday to press on with its nuclear fuel program, ignoring a U.N. deadline to freeze uranium enrichment or face broader sanctions, but it offered to guarantee it would not try to develop nuclear weapons.
Tensions are also rising in Africa's biggest producer Nigeria, also a member of OPEC, ahead of April elections. Militant attacks have already shut a fifth of output.
OPEC next meets in Vienna on March 15 when it will probably leave its supply levels unchanged, Nigeria's energy minister said on Wednesday.
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