+------------------------------------------------------------------------------+
Oil Rises for First Time in 3 Days on Alaskan Pipeline Shutdown
2011-01-10 08:35:03.62 GMT
By Ben Sharples and Christian Schmollinger
Jan. 10 (Bloomberg) -- Oil climbed for the first time in
three days after an Alaskan pipeline carrying about 15 percent
of U.S. crude output was shut following a leak.
Futures gained as much as 2.2 percent after the Trans-
Alaska Pipeline System was closed Jan. 8, forcing companies
including BP Plc to suspend 95 percent of production from the
North Slope area. China's oil imports rose 18 percent in 2010,
the country's customs data showed today, underscoring surging
demand in the world's largest energy user.
"People are a little more concerned with supply
constraints than they were six months ago," said Ben Westmore,
a minerals and energy economist at National Australia Bank Ltd.
in Melbourne. "The shutdown is being factored into prices."
Crude for February delivery increased as much as $1.95 to
$89.98 a barrel in electronic trading on the New York Mercantile
Exchange. It was at $88.72 a barrel at 4:33 p.m. Singapore time.
The contract fell 3.7 percent last week, the most in seven
weeks. Futures gained 15 percent in 2010.
Operators of the Alaska pipeline, an 800-mile (1,287-
kilometer) network crossing the northernmost U.S. state, can't
say when the link will open again. The system starts in Prudhoe
Bay on the North Slope and runs to Valdez, the northernmost ice-
free port in North America.
The line was still closed as of 2:21 p.m. local time
yesterday and there's no estimate of when it would be returned
to service, Alyeska Pipeline Service Co. spokeswoman Michelle
Egan said in a telephone interview.
Curtailment
"We do think that the pipeline won't be closed for any
significant length of time and production will very quickly
return to normal," David Lennox, a Sydney-based resource
analyst at Fat Prophets, told Susan Li on Bloomberg Television's
"Up Front." "With that we'll see the price of crude oil
probably drop back down towards the $88 level, where it had been
trading."
The curtailment in Alaska production follows the shutdown
of Canadian Natural Resources Ltd.'s 110,000-barrel-a-day
Horizon oil sands project after a fire Jan. 6.
The Alyeska closure was expected to cause a narrowing in
the price difference between prompt supplies of West Texas
Intermediate oil, the grade traded in New York, and later
deliveries, according to a Jan. 7 report from JPMorgan Chase &
Co. The spread between the February and April contracts has
dropped to $1.97 today from $2.52 a barrel on Jan. 6.
China Imports
China's crude imports in 2010 climbed to 239.3 million
metric tons, according to the Beijing-based General
Administration of Customs. That's about 4.8 million barrels a
day. December imports declined to 20.86 million tons from 20.9
million the month before.
Brent crude for February settlement rose as much as $1.37,
or 1.5 percent, to $94.70 a barrel on the London-based ICE
Futures Europe exchange. On Jan. 7, it decreased $1.19, or 1.3
percent, to $93.33. The more actively traded March contract was
at $93.65.
Brent's premium to New York oil futures increased to $6.14
a barrel on Jan. 6, the most since Feb. 13, 2009, based on data
compiled by Bloomberg. The spread narrowed to $5.17 today.
Hedge funds and other large speculators lowered their net-
long positions, or wagers on rising prices, in crude contracts
by 14 percent to 187,408 in the seven days ended Jan. 4,
according to a weekly report from the U.S. Commodity Futures
Trading Commission. That was down from 217,046 contracts in the
previous week, which was the biggest total in records going back
to June 2006.
For Related News and Information:
Top energy, oil stories: ETOP <GO> and OTOP <GO>
News on oil inventories: TNI OIL INV <GO>
News on oil markets: NI OILMARKET <GO>
Global energy statistics: ENST <GO>
--With assistance from Susan Li in Hong Kong and Yee Kai Pin in
Singapore. Editors: Alexander Kwiatkowski, Jane, Ching Shen Lee
To contact the reporters on this story:
Ben Sharples in Melbourne at +61-3-9228-8732 or
bsharples@bloomberg.net;
Christian Schmollinger in Singapore at +65-6212-1898 or
christian.s@bloomberg.net
To contact the editor responsible for this story:
Jane, Ching Shen Lee at +60-3-2302-7855 or
jalee@bloomberg.net
