Oil Supplies Tumble in Survey on Enbridge Halt: Energy Markets

U.S. crude-oil supplies probably fell to a five-week low after an Enbridge Energy Partners LP pipeline, the largest linking Canada and the U.S. Midwest, shut for eight days following a leak, a Bloomberg News survey showed.

Inventories slipped 1.75 million barrels, or 0.5 percent, in the seven days ended Sept. 17 from 357.4 million a week earlier, according to the median of 18 analyst estimates before an Energy Department report tomorrow. Seventeen forecast a drop and one a gain. It would be the third consecutive decrease.

The closure of Enbridge’s 6A oil pipeline, which can move 670,000 barrels a day, came as U.S. imports declined 19 percent since July. Canada was the largest exporter of oil to the U.S. in June, the latest month for which Energy Department figures are available. Enbridge started the line Sept. 17.

“This is all about the Enbridge pipeline,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “We’re going to see some impact from that outage, particularly on the Cushing supplies. You’ll see two weeks of this effect before it clears.”

Oil supplies at Cushing, Oklahoma, the delivery point for New York futures, dropped 581,000 barrels, or 1.6 percent, to 35 million in the week ended Sept. 10. Inventories at the midcontinent pipeline hub have fallen 7.6 percent in six weeks.

U.S. imports rose 142,000 barrels, or 1.6 percent, to 9.03 million barrels a day in the week ended Sept. 10, after falling to the lowest level since April the week before.

“The place we should get the biggest hit is from imports,” said Carl Larry, president of Oil Outlooks and Opinions LLC in Houston. “The imports number will definitely look pretty bad.”

Pipeline Rupture

Enbridge closed the pipeline after a Sept. 9 rupture at Romeoville, Illinois, which spilled about 6,100 barrels of oil. The conduit transports Canadian light synthetic, heavy and medium crude oil from Superior, Wisconsin, to Griffith, Indiana.

A storm near oil-producing areas in Mexico may also affect shipments to the U.S.

Mexico shut the ports of Cayo Arcas and Dos Bocas, two of state-oil-company Petroleos Mexicanos’s three largest oil export terminals, on Sept. 16 because of Hurricane Karl. Mexico is the third-largest supplier to the U.S. after Canada and Saudi Arabia. The ports reopened the next day.

Oil supplies were 13 percent above the five-year average in the week ended Sept. 10, according to Energy Department figures.

“Refiners are gearing up for maintenance and oil inventories are very, very high,” said Kyle Cooper, managing director at energy consultant IAF Advisors in Houston.

Refinery Utilization

Refineries probably operated at 86.8 percent of capacity, down 0.8 percentage point from the previous week, according to the survey. It would be the lowest utilization rate since the week ended April 16.

BP Plc halted a fluid catalytic cracker last week for planned work at its Whiting, Indiana, refinery. Citgo Petroleum Corp. said earlier this month it was shutting part of its refinery in Lemont, Illinois, for maintenance.

“Typically, refineries start autumn maintenance programs shortly after Labor Day and stick with them until Thanksgiving, at which point they usually increase until the end of the year,” said Peter Beutel, president of Cameron Hanover Inc., a trading adviser in New Canaan, Connecticut, in a report.

Crude for October delivery fell $1.34, or 1.8 percent, to expire at $73.52 a barrel, the lowest settlement price since Aug. 31. The more-active November futures lost $1.22, or 1.6 percent, to close at $74.97 a barrel.

API Inventories

November prices declined from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 2.23 million barrels to 364.1 million, the highest level since the week ended May 21. November crude fell $1.46, or 1.9 percent, to $74.73 a barrel in electronic trading at 4:31 p.m.

Stockpiles of distillate fuel, a category that includes heating oil and diesel, climbed 100,000 barrels from 174.5 million, the survey showed, the first increase in four weeks. Inventories in the week ended Aug. 20 were the highest since 1983. Nine of the analysts forecast an increase, eight said supplies dropped and one estimated inventories were unchanged.

Gasoline inventories fell 250,000 barrels last week from 224.5 million. Stockpiles in the week ended Sept. 10 were 14 percent higher than the five-year average for the period, according to the Energy Department. Nine survey respondents forecast a decline, seven a gain and two estimated no change.

The department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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