Oil Trades Near $110 on U.S. Pipeline Leak, Mexico Shuts Ports - Now at $111.37!

Submitted by SadInAmerica on Mon, 04/14/2008 - 11:52am.

Crude oil traded near $110 a barrel in New York as repairs to fix a pipeline crack cut supplies of more than 1 million barrels a day from the Gulf of Mexico to the U.S. Midwest.

 

The Capline system was closed April 11 after a technician discovered a leak near Obion, Tennessee, about 190 miles (305 kilometers) west of Nashville. Petroleos Mexicanos, the third- largest supplier of crude to the U.S., has closed two oil-export terminals in the Gulf of Mexico because of winds and lightning.

``It's a very big volume so it depends on how fast they can repair it,'' said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``It could mean a drawdown in inventories in the U.S. mid-continent.''

Crude oil for May delivery traded at $110.07 a barrel at 3 p.m. Singapore time, paring back losses after falling as much as 58 cents, or 0.5 percent, to $109.56 a barrel in electronic on the New York Mercantile Exchange.

New York oil futures gained 15 percent the past two months, reaching a record $112.21 on April 9, as the sliding dollar and falling equities encouraged investors to buy commodities.

 April, Monday 14 2008 - 11:43:09
Crude Oil 
$111.37
 1.23 1.12%
11:43 AM EDT - 2008.04.14

Brent crude for May settlement traded at $108.71 a barrel at 3 p.m. Singapore time, after falling as much as 53 cents, or 0.5 percent, to $108.22 a barrel $108.75 on London's ICE Futures Europe exchange. On April 11, the contract rose 55 cents, or 0.5 percent, to, a record closing price.

Shell Pipeline

Royal Dutch Shell Plc workers are repairing a leak in the 1.1 million barrel-a-day Capline system in Tennessee, shut on April 11. Capline, a 40-inch pipeline, spans about 667 miles and can move 1.1 million barrels of oil a day from Louisiana to a hub at Patoka, Illinois, according to Shell. Capline is operated by Shell and owned by companies including Marathon Oil Co., BP Plc and Plains All American Pipeline LP.

Workers were yesterday welding a new protective casing around the pipeline, the Dyersburg-based State Gazette reported. There is no firm timeframe for bringing the pipeline back into service, Shell spokesman Stan Mays said.

Refineries served by the pipeline include BP Plc's 420,000 barrel-a-day plant in Whiting, Indiana, and Marathon Oil Co.'s 239,000 barrel-a-day facility at Catlettsburg, Kentucky.

Mexico's Merchant Marine announced the closure of the Dos Boca port, in the southern state of Tabasco, in its 10 a.m. (11 a.m. New York time) weather bulletin yesterday and then added the shutdown of its Pajaritos terminal in Coatzacoalcos, Veracruz, in a 4 p.m. bulletin.

Group of Seven

Crude oil prices fell earlier today as the U.S. dollar gained after the Group of Seven nations signaled increased unease with the currency's 14 percent slump over the past year.

The dollar rose the most in two weeks against the euro after the G-7 changed its statement on currencies for the first time in four years at its meeting in Washington on April 11. Commodity prices have surged as the dollar dropped and investors purchased oil and minerals as a hedge against inflation.

The dollar's movement today ``rubbed off on oil,'' said Rowan Menzies, head of research at Commodity Warrants Australia Ltd. in Sydney.

The dollar rose to $1.5718 per euro at 1:23 p.m. in Singapore, from $1.5810 on April 11. It earlier reached $1.56 a euro, the strongest level since April 3.

The last time the G-7, which comprises the U.S., Japan, Germany, the U.K., France, Italy and Canada, intervened in the currency market was on Sept. 22, 2000, when they bought the euro after it tumbled 27 percent from its 1999 debut.

 

Nesa Subramaniyan - April 14, 2008 - posted at  www.bloomberg.com

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Submitted by SadInAmerica on Mon, 04/14/2008 - 11:52am.