April 12 (Bloomberg) -- Royal Dutch Shell Plc said a leak forced the shutdown of a crude oil pipeline that moves more than 1 million barrels a day from the Gulf of Mexico to Midwestern refiners, cutting supplies at a time of near-record prices.

The Capline system was closed yesterday after a technician discovered a 10-gallon (37-liter) leak near Obion, Tennessee, about 190 miles (305 kilometers) west of Nashville, said Stan Mays, a Shell spokesman, in a statement. Ten gallons is less than a quarter of a barrel of oil.

``The cause of the release is under investigation,'' Mays said. ``There is no estimated time when the pipeline will be repaired and returned to service.''

Capline spans about 667 miles and can move 1.1 million barrels of oil a day from Louisiana to the pipeline hub at Patoka, Illinois, according to Shell. Capline is operated by Shell and owned by companies including Marathon Oil Co., BP Plc and Plains All American Pipeline LP.

``The key question really is how long the outage is going to be,'' said Andy Lipow, president of Lipow Oil Associates LLC, a consulting company based in Houston. ``A few days isn't going to be an issue at all. If you tell me it's going to be a week, then that's going to be an issue.''

Oil Futures

Oil futures on the New York Mercantile Exchange rose 3 cents yesterday to $110.14 a barrel. Prices are up 73 percent in the past year. Oil in New York rose to a record $112.21 a barrel on April 9 after the Energy Department reported an unexpected decline in inventories.

Regular, self-serve gasoline at the pump in the U.S. rose 0.8 cent to a record average $3.365 a gallon, AAA said yesterday on its Web site.

Refiners who normally receive oil through Capline can temporarily obtain it through the Patoka hub in southern Illinois, Lipow said. The same connections can transport oil from Capline to some of the biggest refineries in the country.

These may include BP Plc's 420,000 barrel-a-day Whiting, Indiana, refinery, the largest in the U.S. Midwest, as well as Marathon Oil Co.'s 239,000 barrel-a-day refinery at Catlettsburg, Kentucky, and its 213,000 barrel-a-day refinery in Robinson, Illinois, he said.

Supplies

``There are interconnections from Capline to most of the refineries from Chicago through the Ohio Valley,'' Lipow said. ``They can supply all those places, but I don't know how much of a percentage of the whole Capline provides. Some refineries could be more affected than the others.''

Marathon didn't immediately return a call for comment. BP spokesman Scott Dean declined to comment on whether Whiting may be affected by the pipeline shutdown.

Oil supplies in the U.S. Midcontinent were near their highest in six months last week, the Energy Department reported April 9. Regional inventories fell 315,000 barrels, or 0.5 percent, to 65.1 million barrels in the week ended April 4. Stocks reached a six-month high of 65.5 million barrels in the week ended March 21.

Biggest Producer

Shell, Europe's largest oil company, produces about 370,000 barrels of oil equivalent in the Gulf of Mexico each day. That's about 80 percent of the company's U.S. output. The company is the biggest producer in Gulf waters, the U.S. Interior Department's Minerals Management Service has said.

Crude oil prices were expected to fall next week as imports increase and U.S. refiners operate at below-average rates, bolstering inventories, according to 15 of 28 analysts surveyed by Bloomberg News before the Shell leak was reported.

Fifty-four percent of the analysts surveyed said prices will drop through April 18. Eleven of the respondents, or 39 percent, said futures will rise and two forecast that prices will be little changed. Last week, 47 percent said oil would decline.

The Capline spill was reported on earlier by the State Gazette of Dyersburg, Tennessee.

To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; or Sonja Franklin in Calgary at sfranklin6@bloomberg.net;

Last Updated: April 12, 2008 18:12 EDT