|Oil prices surge after pipeline shutdown|
|Tuesday, 11 January 2011 09:20|
Oil prices rose above $89 a barrel Monday after the 1,300km trans-Alaska pipeline owned by BP and four other companies was shut down because of a leak.Benchmark oil for February delivery climbed $1.22 to settle at US$89.25 a barrel on the New York Mercantile Exchange.
The pipeline, which carries between 630,000 barrels and 650,000 barrels a day, was shut down Saturday after a leak was reported at a North Slope pump station. The leak has been contained but there is no immediate timeframe for reopening the pipeline, according to Alyeska Pipeline Service Co, which manages the line.
The closure cut oil production on the North Slope to about five per cent of normal. The pipeline carries about 17 per cent of the US crude output.
Refineries that rely on Alaska crude have several weeks of inventories available so prices aren't expected to top $100 a barrel because of the closure, according to The Schork Report, an energy consulting firm.
"We don't believe the news as it stands is enough to push crude oil above the $100 barrier," The Schork Report said.
"If production is reduced to 5 per cent until March or April, then we'll change our mind."
Once a repair schedule has been released, oil prices could ease, added Cameron Hanover energy consultancy in its Monday report.
In addition to BP, the other pipeline owners include ConocoPhillips, Exxon Mobil Corp, Unocal Pipeline Co and Koch Alaska Pipeline Company LLC.
Meanwhile, a stronger dollar tempered the rise in oil and other energy prices. Since crude is priced in dollars, a stronger dollar makes it more expensive for buyers who use the euro or other currencies.
In other Nymex trading in February contracts, heating oil gained 6.98 cents to settle at $2.5561 a gallon, while gasoline futures added 4.12 cents to settle at $2.4543 per gallon.February natural gas futures lost 2.3 cents to settle at $4.399 per 1,000 cubic feet.
In London, Brent crude rose $2.43 to settle at $95.70 a barrel on the ICE Futures exchange.
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