US Pipeline Explosions Shuts Down 1.7million BPD

LONDON - Just when tightening oil supplies across the world looked ready to experience some relief, with OPEC ministers to meet next week potentially to raise production, a pipeline explosion in the United States has cut critical supplies from Canada and sparked a jump in prices on Thursday.

Canadian company Enbridge (nyse: ENB - news - people ) has shut down four pipelines carrying crude oil to the United States after an explosion on Wednesday afternoon claimed the lives of two workers. The pipeline blast took place three miles from a terminal in Clearbrook, Minnesota, and the shutdown has effectively corked 1.7 million barrels' worth of oil per day.
The supply shock sparked a boost in oil futures. West Texas Intermediate for January delivery gained $3.63, or 4.0%, to $94.25 per barrel, while Brent crude for January delivery advanced $2.06, or 2.3%, to $91.87 per barrel, on the ICE futures exchange.

"This pipeline blast has caused a little bit of consternation simply because it is such an important pipeline," said Lawrence Poole, energy analyst with Global Insight. He said the affected lines contributed 20% of America's import requirement, adding: "In the short term, there is no doubt that it is going to add some pressure to oil futures."

Above story by Lionel Laurent,for more, go here.

OPEC Comment Drives Oil Close to $95

"The fact that the OPEC members are talking about issues like the weak U.S. dollar and not talking about raising output is supportive of strong pricing and so we're seeing signs of the market gaining strength," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Iranian President Mahmoud Ahmadinejad, in Riyadh, Saudi Arabia, called the dollar a "worthless piece of paper," and said the cartel's members have expressed interest in converting cash reserves into a currency other than the U.S. dollar -- a sentiment echoed by Venezuelan President Hugo Chavez, who called the euro a better option.

There had been speculation over whether OPEC would raise production at the meeting following recent oil price increases that have closed in on $100 a barrel. U.S. Energy Secretary Samuel Bodman had called on OPEC to raise output last week, but cartel officials say they will hold off any decision until the group meets next month in Abu Dhabi in the United Arab Emirates.

Some analysts say a decision to increase output next month is unlikely to strengthen supplies to meet peak winter demand season.

"Even if the OPEC ministers decide to raise output in early December, that would likely become effective only in January so by the time the oil gets to the market, the winter season would essentially be over," Shum said.

OPEC officials have also cast doubt on the effect any output hike would have on oil prices, saying the recent rise has been driven by the falling dollar and financial speculation by investment funds, rather than any supply shortage.

In other Nymex trading, heating oil futures gained 1.79 cents to $2.6050 a gallon (3.8 liters) while gasoline futures added 1.56 cents to $2.3910 a gallon.

Natural gas futures jumped 7.2 cents to $8.073 per 1,000 cubic feet.

Associated Press Writer Gillian Wong in Singapore contributed to this report.

From Yahoo News.com

NVDL: Unfortunately, $100 is a matter of time.