London: Oil rose to around $75 a barrel on Friday, boosted by dollar weakness and stronger equities, but the anticipated reopening of a major pipeline delivering crude into the United States was expected to cap gains.
Prices have traded rangebound this year but spiked to a one-month high after last week’s closure of the Enbridge Line 6A that brings Canadian crude to US Midwest refineries and the crucial Cushing, Oklahoma, oil hub.
US crude for October contract, due to expire next week, rose 52 cents to $75.09 a barrel by 2:38pm.
November US crude gained 68 cents to $76.42. ICE Brent for November rose 50 cents to $78.98. October Brent expired on Wednesday.
“It (price rise) will be shortlived as this major oil pipeline will be back in operation today,” Carsten Fritsch at Commerzbank said. “We expect oil prices to come under pressure in the coming days.”
The oil market has spent much of the year in lockstep with equities and negatively correlated to the US dollar, which was down 0.36% against a basket of currencies on Friday.
European shares rose early on Friday.
US crude touched $74.11 on Thursday, its lowest price since 9 September, when a leak forced Enbridge Inc to halt flows through the 670,000-barrel-per-day (bpd) Line 6A.
Line 6A is the main artery of Enbridge’s Lakehead Pipeline System, the backbone of US oil imports from top supplier Canada.
Enbridge has now completed repairs and received regulatory approval to restart the duct, which carries up to a third of Canada’s US-bound crude shipments, restoring nearly 5% of imports for the world’s largest oil consuming nation.
Investment bank Goldman Sachs said on Friday that commodities, like oil, which follow a cyclical trend have upside potential.
“We believe that near-to-medium term fundamentals remain most constructive for crude oil, copper, platinum and corn, with short-term risk/reward looking the best for crude oil,” Goldman said in a research note.
Hurricane Karl formed in the southern Gulf of Mexico on Thursday and gained strength as it headed across Mexico’s offshore oil patch.
Mexican oil monopoly Pemex said it had halted production at 14 wells in the Gulf of Mexico and evacuated personnel as Karl moved through a key offshore production area. Two of Mexico’s main oil exporting ports also closed as Karl passed through the region.