Enbridge Line 6A pipeline stays shut
By Erwin Seba
HOUSTON (Reuters) - Enbridge's Line 6A pipeline carrying Canadian crude oil to U.S. refineries and a crucial oil hub in Cushing, Oklahoma, remained shut on Monday, sending crude oil prices to their highest levels in a month.
No date has been set for restarting the pipeline, which was shut Thursday as oil was bubbling up through the soil in a industrial section of Romeoville, Illinois, about 30 miles from downtown Chicago.
In early trade on the New York Mercantile Exchange, U.S. crude oil for October delivery climbed $1.59 to $78.04, its highest level since August 11, due in part to the Line 6A shutdown. Prices later fell back, with October crude trading up $1.30 at $77.75 a barrel.
"The petroleum markets were trading higher in early going Monday, with support coming from a stronger equity market, a weaker U.S. dollar, and ongoing concerns regarding the Enbridge pipeline outage as there were still no estimates on how long the disruption of Midwest crude oil deliveries will last," Citigroup analyst Tim Evans said in a research note.
Workers were preparing to cut out the problem section of the pipeline and replace it.
The suspension of crude shipments on the 6A line has the potential to reduce flows to Cushing, the delivery point for NYMEX crude, by around 300,000 barrels per day, according to JP Morgan oil analysts headed by Lawrence Eagles, taking into account the potential to pump crude via alternative routes.
Increased environmental scrutiny of the pipeline and its repairs could also delay the restart of Line 6A's flow, JP Morgan said.
"Such leaks are not unusual, and in normal circumstances we would expect the line to be up and running in a matter of days, but a rapid restart of the most recently shuttered pipeline is unlikely because of a 'lengthy' environmental review process," JP Morgan said. Continued...