Oil prices fell on Tuesday after Enbridge Inc said repairs to its key Line 6A pipeline bringing Canadian crude oil to the United States were nearly complete and it hoped to gain approval to resume shipments. A spokeswoman also said Enbridge had restarted its 70,000 barrel per day Line 10 crude pipeline from Ontario to New York state after no leak was found on that line. The line was shut late Monday on a suspected leak.
After crude settled in New York, US government regulators said Enbridge will not be allowed to restart its 670,000 barrels per day Line 6A that leaked in Illinois last week until the government deems it safe. US crude for October delivery fell 39 cents, or 0.51 percent, to settle at $76.80 per barrel. It traded from $76.21 to $77.99, stalling just below Monday's intraday peak of $78.04 - the highest front-month price since August 11.
In afternoon trading in New York, US crude oil futures trading volume was at about 850,000, 32 percent above the one-year average, according to Reuters data. ICE October Brent crude rose 13 cents to settle at $79.16 a barrel, managing to hold on to some of its gains, but finishing well below the $79.90 intraday high.
"The news that the Enbridge pipeline will restart soon had a lot to do with the downward momentum in crude oil futures," said Phil Flynn, analyst at PFGBest Research in Chicago. US oil prices had surged Monday on the ongoing shutdown of Calgary-based Enbridge's 670,000 barrel per day Line 6A, the biggest Canada-US pipeline.
Enbridge shutting the crude oil pipeline to New York state on Monday followed last week's leak in Illinois that shut the Line 6A that brings Canadian crude to US Midwest refineries and the crucial Cushing, Oklahoma, oil hub. The Line 6A leak occurred just six weeks after Enbridge's Line 6B pipeline ruptured in Michigan. Line 6B also remained shut, awaiting regulatory approval to restart.
Trading sources said the weak dollar boosted crude prices in early trade to near $78 a barrel. Traders also eyed a low-pressure system in the Caribbean Sea that was given a 70 percent chance of developing into a tropical depression and awaited weekly inventory reports from industry and government that were expected to show US crude stocks fell last week.
While gasoline stocks were expected to have fallen last week, MasterCard said on Tuesday that US retail gasoline demand fell 3.2 percent last week versus the previous week as stormy weather and wildfires cut into Labour Day holiday travel. Demand also fell versus the year ago period. Industry group American Petroleum Institute will release its inventory report on Tuesday at 4:30 pm EDT (2030 GMT). The US Energy Information Administration's report is due on Wednesday at 10:30 am EDT (1430 GMT).
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