Crude recovers from Monday's sell off on US pipeline leak

London (Platts)--17Apr2007

Crude prices rose Tuesday as a leak on a Canadian pipeline that links to
the US helped recover some losses made on NNPC's confirmation that Nigerian
Forcados production, which has been shut in for over a year, is to resume in
June.

At 1051 London time (0951 GMT), the front-month June ICE Brent futures
contract was up 34 cents to $67.59/b, after losing more than $1.90/b in
intra-day trading on Monday. The May WTI contracts on NYMEX and ICE were up 46
cents to $64.07/b, quicker recovering from Monday's weakness as news about a
leak in a pipeline between Canada and Cushing over the weekend hit the market.

"The complex is moving sideways at the moment, there is no real market
direction, especially for Brent...the market is waiting for some fresh
impulses, possibly coming from Wednesday's US inventory data release," a
London-based broker said.

"Monday's sell off can be mainly contributed to US refinery restart,
which took some pressure of RBOB, resulting in a product sell off," the broker
added.

Valero's 170,000 b/d Mc Kee refinery in Sunrey, Texas, was shut for two
months following a fire, which has left a glut of crude barrels in the Midwest
that caused price relationships to blow out to abnormal levels. After the
restart, some pressure may be taken from prices, according to analysts.

The latest news of a leak at Enbridge's 34-inch, 490,000 b/d crude
pipeline that links western Canada to the US, has pushed prices, especially
WTI futures, up. Enbridge late Monday said that it still has no estimate as to
when sections of its would be restarted following the discovery of a leak over
the weekend.

"The restart of the McKee refinery and the disruption on the pipeline
between Canada and PADD 2 has led strong short covering on the front WTI
spreads...," analysts said in a Petromatrix report on Tuesday.

Product futures in Europe were not showing much movement, with May ICE
gasoil futures unchanged at $591.50/mt. However in the US, May MYNEX heating
oil and RBOB gained 1.36 cents and 2.73 cents to $1.8729/gallon and
$2.1430/gallon, respectively.

-- Verena Peternell; verena_peternell@platts.com