SINGAPORE (Reuters) – Oil edged up on Tuesday as a leak on a Canadian pipeline that pumps crude to the United States helped recoup deeper losses caused by news that a big Nigerian field was about to resume pumping after a year-long halt.
London Brent crude futures on the ICE exchange rose 30 cents to $67.55 a barrel by 0730 GMT, after falling $1.38 on Monday. Traders say Brent now better reflects the global market than landlocked benchmark U.S. crude which held steady at $63.61 a barrel, after ceding only 2 cents on Monday.
The market stabilized on hopes any lasting disruption to Enbridge Inc’s pipeline from Canada could help drain swollen mid-continent stocks that last week pushed the U.S. contract to a record discount near $7 to Brent.
“There’s some short-covering as people are looking at U.S. oil inventories, political risk and the pipeline,” said Tetsu Emori, analyst at Mitsui Bussan Futures in Tokyo.
Part of Enbridge’s 450,000 barrels per day (bpd) Line 3, the main thoroughfare for Canadian crude to U.S. Midwest refineries, sprung a leak on Sunday night and was shut, the company said.
A spokeswoman said the pipeline was still pumping oil from terminals south of the leak, but was not able to give an estimate of current pumping rates or say how long the disruption could last.
Prices had fell sharply earlier on Monday after a source with Nigeria’s state oil company said Royal Dutch Shell would resume production from its 380,000 bpd Forcados oilfield by the end of this month, after the oilfield was shut in February 2006.
Traders are still keeping a close eye on Nigeria, the world’s eighth-largest exporter, for fear that electoral violence could further disrupt oil output, which has already been cut by one-fifth for more than a year.
Around 50 people were killed during state elections over the weekend, ahead of the April 21 presidential vote and protests over widespread abuses grew as the ruling party looked set for a landslide win
Nigeria’s light gasoline-rich crude will be in demand to make the motor fuel ahead of peak summer demand in the northern hemisphere. U.S. gasoline inventories have fallen for nine weeks in a row, driven by strong demand and refinery outages.
Analysts polled by Reuters said they expected U.S. gasoline stocks to have dropped by a further 2 million barrels last week in government data due on Wednesday, despite the return of some refineries from seasonal maintenance shutdowns.