The hot summer months do take their tollJuly 5, 2015 12:00
Oil rebounds, set for weekly drop on pipe restart
Technicals show bear trend towards $72.63
September 17, 2010 9:13 by Reuters
Oil rebounded on Friday, spurred by rising Asian equities, but was still headed for its biggest weekly drop in a month as Enbridge prepared to resume flows through its largest Canada-U.S. pipeline within hours.
U.S. crude for October rose 30 cents to $74.87 a barrel by 0608 GMT, but still down 2.1 percent this week. It touched $74.11 on Thursday, its lowest price since Sept. 9, when a leak forced Enbridge to halt flows through its 670,000-barrel-per-day (bpd) Line 6A that supplies crude to refiners in the U.S. Midwest.
Prices reached a one-month high of $78.04 earlier this week on expectations of an extended outage that would drain high inventories at the Cushing, Oklahoma, storage and pricing hub for U.S. crude benchmark West Texas Intermediate (WTI), reducing European marker Brent’s current premium to WTI.
“WTI (is) pressured by the ongoing Cushing bottleneck, and Brent supported by seasonal maintenance to North Sea operations, regional supply issues, and stronger global demand,” said JP Morgan oil analysts headed by Lawrence Eagles.
Enbridge Inc has completed repairs and received regulatory approval to restart the duct on Friday, which carries up to a third of Canada’s U.S.-bound crude shipments, restoring nearly 5 percent of imports for the world’s largest oil consuming nation.
Line 6A is the main artery of Enbridge’s Lakehead Pipeline System, the backbone of U.S. oil imports from top supplier Canada. The line serves refineries with a combined capacity of more than 1 million barrels per day (bpd) in the Chicago area and connects with a spur that reaches the key Cushing hub.
CUSHING STOCKS RISE
Crude stored at the Cushing hub rose by 93,496 barrels to 37.66 million barrels in the week to Sept. 14, according to a report from industry data provider Genscape on Thursday.
Genscape estimated that Cushing crude tanks were filled to 72 percent of shell capacity by Tuesday, unchanged from last week.
“We not only believe that Cushing stocks will reach capacity by the end of October, but that new supply additions have the potential to keep the forward curve under pressure, possibly all the way through to the spring 2011 maintenance program,” JP Morgan said.
November WTI gained 50 cents to $76.24, trading about $1.35 above the front month. And ICE Brent for November rose 49 cents to $78.97, commanding a premium of almost $2.75 to November WTI. October Brent expired on Wednesday.
“At this juncture we are cautious on some of the seasonal effects which have been driving Brent,” JP Morgan said.
Crude oil output from nine of the main North Sea streams will increase by 9.9 percent in October, according to data compiled by Reuters on Thursday from trading sources. Output in October is set to average 2.017 million bpd, up from 1.836 million bpd planned in September.
Japanese stocks climbed to a six-month high on Friday following Tokyo’s aggressive yen selling on Wednesday. U.S. stocks were mildly positive a day earlier, as a mood of uncertainty about the strength of the global recovery prevailed across markets.
New U.S. claims for jobless benefits hit a two-month low last week, hinting at some stability in the labor market, while the contraction in factory activity in the Mid-Atlantic region slowed in September.
The reports on Thursday further reduced the odds of a double-dip recession and suggested the Federal Reserve may not need to launch a fresh round of asset purchases to aid the economic recovery.
Hurricane Karl formed in the southern Gulf of Mexico on Thursday and gained strength as it headed across Mexico’s offshore oil patch.
Mexican oil monopoly Pemex said on Thursday it had halted production at 14 wells in the Gulf of Mexico and evacuated personnel as Hurricane Karl moved through a key offshore production area.
Two of Mexico’s main oil exporting ports also closed as Karl passed through the region.
(Editing by Clarence Fernandez)