NEW YORK: Brent crude rose above $111 a barrel in choppy trading yesterday as Saudi Arabia predicted robust demand from Asia, while US crude prices fell as a pipeline leak in Arkansas threatened to increase the glut of oil in the US Midwest.
ExxonMobil’s Pegasus pipeline, which can carry more than 90,000 barrels per day of Canadian oil through the US Midwest to the Gulf Coast, has been shut since rupturing on Friday.
The shut pipeline compounds expectations of a 2.3 million- barrel rise in crude oil stocks in the US last week, a provisional poll of analysts and traders showed. “It’s kind of a landlocked situation,” said Thomas Mooney, president of Southeast Energy, Inc. “They’re making more crude in the Midwest than they can use.”
Rising US production, imports from Canada, and limited pipeline flows from the Midwest to the Gulf Coast have weighed on US crude prices relative to seaborne benchmark Brent, causing the prices of the two main oil contracts to diverge. Reuters
