London/Singapore: Oil surged by more than $4 a barrel towards $95 on 29 November, after a pipeline explosion cut crude oil imports to top consumer the United States by nearly a fifth.
US crude jumped $4.10 to $94.72 (Rs3,760) a barrel by 1434 IST, reversing the previous session’s loss of $3.80.
Brent crude leapt $2.74 to $92.55 a barrel.
An explosion hit a main pipeline that supplies Canadian crude to US Midwest refineries on 28 November, forcing operator Enbridge Inc to shut down four of its main pipelines.
The pipelines carry an estimated 1.9 million barrels per day (bpd) of Canadian crude to the United States, a fifth of US imports.
Enbridge Inc did not give further details about the total line capacity that had been shut down and said it was unable to say when the line might be able to restart, while a county official said the fire may burn for three days.
“This is a fast reaction to the accident, and it will be good news for bull players,” said Tetsu Emori, fund manager at Astmax Futures Co.
The incident partially offset the impact of a smaller-than-expected drop in US crude and distillate inventories, which had eased concern about supply in the world’s largest consumer and pushed prices into the biggest decline since 6 August 2007.
US crude stocks fell 4,00,000 barrels last week, less than half of what analysts had expected, as imports offset higher demand from the nation’s refineries, the Energy Information Administration said.
But traders said expectations that OPEC might increase output when it meets next week in Abu Dhabi might drive down oil prices again.
A Reuters poll of 21 banks, funds, consultants and traders showed a majority expecting OPEC to increase output by at least 5,00,000 barrels per day (bpd) when its ministers meet on 5 December.
Top OPEC Gulf officials have expressed concern about oil’s record run, but insist supplies are sufficient and do not support prices near $100.