Commodity Corner: Pipeline Outage Continues, But Oil Ends Lower
October oil futures edged lower Tuesday despite fears of a prolonged shutdown of a key Enbridge pipeline that carries crude oil from Canada to the U.S.
Crude prices settled at $76.80 a barrel, a 39-cent decrease from the previous day's trading session. The continued shutdown of Line 6A of Enbridge's Lakehead System near Chicago is providing support for oil prices. Line 6A, which can carry up to 670,000 barrels a day from Canada to the upper Midwest, will not be allowed to restart until U.S. government regulators deem it safe. Already causing a sharp increase in gas prices across the region, investors fear the supply disruption could begin to drain U.S. oil inventories.
Additionally, sluggish economic growth in Germany applied downward pressure to crude futures. A survey revealed lower-than-expected German investor sentiment, and industrial production in the euro-area was flat in July, according to EU's statistics office. Analysts suggest that despite China's booming economy, mixed economic conditions in the U.S. and Europe have kept price increases in check.
The intraday range for October crude was $76.21 to $77.99 a barrel.
Meanwhile, natural gas for October delivery rose 2.8 cents Tuesday to settle at $3.97 per thousand cubic feet. The third price increase in as many trading days supports speculation that the days of lower natural gas futures may have passed for the season. However, some analysts are being cautious and are not declaring a seasonal rally yet. Gas prices were threatened earlier Tuesday on forecasts of storm
clusters forming in the Gulf of Mexico, but no immediate storm threats have been seen--steering clear of production outages. Natural gas
fluctuated between $3.84 and $4.02 Tuesday.
RBOB gasoline settled lower at $1.97 a gallon, peaking at $2.00 and bottoming out at $1.96.