Explosion At A US-Canadian Pipeline Sends Oil Prices To $95.17 A Barrel, 5pct High

November 29, 2007 10:51 a.m. EST

New York, NY (AHN) - Oil prices soared up on Thursday by $4 following an explosion at a pipeline interrupting the supply of the crude oil to the U.S. Midwest from Canada.

The fire that broke out late Wednesday cut Canadian oil supplies through the pipelines. Canada provides the U.S. with at least 15 percent of imported crude.

The explosion killed two workers fixing the Enbridge Energy Inc. pipeline in northern Minnesota. "It is a major incident with major supply issues in an important area," Paul Horsnell, head of commodities research at Barclays Capital in London, told Bloomberg. "It will put pressure on prompt demand in the Midwest."

Due to the incident, four pipelines supplying 1.5 million barrels a day were closed till further notice, although the fire was extinguished.

"All our lines are shut down until we can safely start up the system," Denise Hamsher, a spokeswoman for Calgary-based Enbridge, the International Herald Tribune reported on Thursday. "At least one or two lines will be shut down for quite sometime."

Crude oil for January delivery surged by 5 percent or $4.55 to $95.17 a barrel in New York Mercantile Exchange trading on Thursday morning.

"In the short term, there is no doubt that it is going to add some pressure to oil futures," Lawrence Poole, energy analyst with Global Insight, told Forbes.