US pipeline plan pushes oil futures above $100
US crude oil futures sprang back above $100 a barrel on plans to reverse a key pipeline that would reconnect the supply of West Texas Intermediate to global markets.
Enbridge, a Canadian pipeline company, said it would pay ConocoPhillips $1.15bn to buy a 50 per cent stake in the Seaway pipeline and with co-owner Enterprise Products Partnersreverse it to run south from landlocked Cushing, Oklahoma, to the Gulf of Mexico.
The plan had important implications for energy markets. Elevated stocks in and around Cushing, the delivery point for West Texas Intermediate crude listed by CME Group, have caused the blend to suffer a severe discount to similar oil types, challenging its status as a benchmark.
The plan unveiled yesterday is the first to reverse an existing pipeline to help drain Cushing’s 32m barrels in inventories.
“The bottleneck is being resolved,” said Antoine Halff, economist at the Energy Information Administration in Washington. “This is going to cause inventories to rebalance and prices to realign between inland and coastal locations.”
US crude for December delivery rose 2.5 per cent to $101.89 a barrel, surpassing $100 for the first time since July. Brent, the benchmark linked to North Sea oilfields, fell 0.4 per cent to $111.75. Last month the US benchmark briefly dipped to a $28-a-barrel discount to Brent. Andy Lipow, president of consultants Lipow Oil Associates in Houston, said: “The spread could continue to narrow as any crude oil inventory overhang is moved down to the Gulf
Be the first to comment.
