New York oil soars after Canadian pipelines shut

New York oil prices sharply rebounded Monday after a leak forced the closure of Canadian pipelines, raising concerns about supply disruptions in North America. New York's main contract, West Texas Intermediate (WTI) light sweet crude for August, closed at $95.18 a barrel, up a hefty $1.49 from Friday. European benchmark Brent eked out a small gain amid concerns about China's slowing economy and credit crunch, which cast a cloud over financial markets. Brent North Sea crude for delivery in August clawed back loses to end 25 cents higher at $101.16 a barrel in London trade. The New York WTI contract had opened lower but rebounded as investors worried about Canadian pipeline supplies after heavy rains caused severe flooding in western Canada. On Sunday, Canadian energy company Enbridge announced that it had shut three pipelines in Alberta province after one of them leaked about 750 barrels of crude. The company said that heavy rains in the area may have resulted in ground movement that caused the leak. The other pipelines were shut as a precaution. "There are three pipelines down and this is giving support to the WTI," said Andy Lipow of Lipow Oil Associates. The shutdown affected the pipeline network feeding oil from Alberta to refineries in Canada and the United States. Phil Flynn of Price Futures Group said the pipelines transport about one million barrels per day and the closure came as refiners get ready for the big July 4 US Independence Day holiday weekend. "People expected that it would be back on line immediately," Flynn said. But, he said, the Canadian company gave no time frame for reopening the pipelines "so we saw a little bit of panic buying." The upcoming US Commerce Department's third estimate of first-quarter US economic growth, on Wednesday, also weighed on the crude market, with investors fretting that an upbeat reading may nudge the Federal Reserve closer to winding down its massive stimulus. "There is some concern that if there is a revision of the estimates upwards, it might suggest that the US Fed will taper off its stimulus program sooner," Jason Hughes, head of sales trading at CMC Markets in Singapore, told AFP.