Oil climbs to near $76 after pipeline shutdown

Filed under: Daily News | Tags:

Oil prices climbed to near $76 a barrel today after a pipeline in the US shut down and as better economic indicators from Japan to the U.S. boosted confidence that demand for fuel will improve.

By early afternoon in Europe, benchmark crude for October delivery was up $1.40 to $75.65 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 42 cents on Thursday to settle at $74.25 a barrel.

A pipeline transporting 670,000 barrels of oil a day was shut Thursday in Illinois due to a leak. No injuries were reported and authorities said they have yet to determine what caused the leak.

The pipeline is owned by Enbridge Energy Partners, an affiliate of Enbridge Inc., based in Calgary, Canada.

“It is not the first time that there is a leak on a pipeline and in the past it never took too long for the repairs to be done,” said Olivier Jakob of Petromatrix in Switzerland, noting that environmental concerns amplified by the Deepwater Horizon incident may result in lengthier repair work.

Asia stock markets were mostly higher after revised figures from Japan showed its economy’s pulse in the second quarter was stronger than initially indicated. Gross domestic product expanded at an annualized rate of 1.5 percent in the April-June period, an improvement on the meager 0.4 percent in last month’s preliminary report.

Trade figures from China also provided some optimism. Export growth slowed in August but imports rebounded, suggesting China’s appetite for crude and other raw materials remains robust.

The data from the two Asian economic giants came after the U.S. Labor Department said new claims for unemployment benefits dropped by 27,000 last week, more than economists expected. That helped push U.S. stock prices up Thursday. Energy traders have been watching the direction of stocks for signs of confidence in the economy, which could increase oil and gas demand.

The Energy Department’s Energy Information Administration said crude inventories fell by 1.9 million barrels last week from the week before. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expected a drop of 730,000 barrels. Supplies of gasoline and distillates fell as well.

In other Nymex trading in October contracts, heating oil was up 1.32 cents at $2.0816 a gallon and gasoline added 1.81 cents to $1.9535 a gallon. Natural gas rose 4.1 cents to $3.809 per 1,000 cubic feet.

In London, Brent crude rose 3 cents to $77.50 a barrel on the ICE Futures exchange.