Enbridge restarts Bakken pipeline system in North Dakota after fire

By HEESU LEE
Bloomberg

Oil pared its advance after the biggest annual slide since the 2008 global financial crisis as Enbridge restarted its North Dakota pipeline system after a fire at a truck-loading facility.

Futures rose 0.6% in New York and are headed for a sixth weekly loss. The pipeline blaze started yesterday at the facility leased to Tidal Energy Marketing, an Enbridge unit, said Michael Barnes, a spokesman for the Calgary-based company.

A manufacturing gauge in China, the world’s second-largest oil consumer, fell to the weakest level in 18 months, government data showed yesterday.

Oil is trading near a five-year low after slumping 46% in 2014 as US producers and the Organization of Petroleum Exporting Countries ceded no ground in their battle for market share. OPEC pumped above its quota for a seventh month in December even as US output expanded to the highest in more than three decades.

“If we do see some supply-side responses, or even if they’re anticipated over the course of this first quarter of the year, we might find that oil has in fact bottomed,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “We’re now clearly in a consolidation zone and it’s not clear which way crude will break from the current levels.”

WTI for February delivery gained as much as $1.84, or 3.5%, to $55.11/bbl in electronic trading on the New York Mercantile Exchange and was at $53.58 at 4:03 p.m. Singapore time. The contract dropped 85 cents to $53.27 on Dec. 31. Total volume was about 31% above the 100-day average. Prices are down 2.1% this week.

Enbridge Fire

Brent for February settlement climbed as much as $1.21, or 2.1%, to $58.54/bbl on the London-based ICE Futures Europe exchange. The European benchmark crude slumped 48% last year. It traded at a premium of $3.81 to WTI today.

Eight out of 12 crude storage tanks, with a capacity of 400 bbl each, caught fire at the Enbridge site, according to Karolin Rockvoy, a manager at the Emergency Management Services for McKenzie County.

North Dakota is home to the Bakken shale formation that contributes more than 1 million bpd to the nation’s oil output.

US oil production averaged 9.12 million bpd in the week ended Dec. 26, according to the Energy Information Administration. Output increased to 9.14 million bpd through Dec. 12, the most in weekly data that started in January 1983.

US Supplies

Crude inventories shrank by 1.8 million bbl to 385.5 million last week, compared with a median gain of 900,000 bbl projected in a Bloomberg News survey of nine analysts. Stockpiles at Cushing, Oklahoma, the country’s biggest oil-storage hub and the delivery point for WTI futures, rose by 2 million to 30.8 million.

OPEC’s production slid by 122,000 bpd from November to 30.24 million last month, led by losses in Saudi Arabia, Libya and the United Arab Emirates, a separate Bloomberg survey of companies, producers and analysts shows. The 12-member group, which supplies about 40 percent of the world’s crude, has a collective target of 30 million bpd.

In China, the official Purchasing Managers’ Index dropped to 50.1 in December from 50.3 the previous month, according to data from the statistics bureau and the China Federation of Logistics and Purchasing. A separate manufacturing reading from HSBC Holdings and Markit Economics on Dec. 31 also fell.

WTI may decline next week, another Bloomberg survey shows. Eighteen of 32 analysts and traders, or 56%, predicted futures may decrease through Jan. 9 while eight respondents forecast prices will climb.

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