BUSINESS
11/16/2011 08:25 EST | Updated 01/16/2012 05:12 EST

Oil slips but above US$99 on concerns about eurozone's debt crisis effects on growth

NEW YORK, N.Y. - Oil prices hit $100 per barrel for the first time in nearly four months Wednesday as U.S. supplies dropped and a pipeline deal promised to cut them further.

Prices have soared 26 per cent since the end of September as the U.S. economy improves and tensions rise in countries that hold some of the world's major sources of crude.

The price of U.S. benchmark crude settled $3.22 higher at US$102.59 per barrel on the New York Mercantile Exchange.

Oil prices jumped after a Canadian pipeline company, Enbridge Inc. (TSX:ENB), announced it would ship crude away from a key delivery point in the U.S. Midwest.

The delivery point in Cushing, Okla., has been historically oversupplied with little access to international oil markets. That appeared to change Wednesday when Enbridge announced that it had purchased a 50 per cent stake in the Seaway pipeline from ConocoPhillips for $1.15 billion. The company plans to use it to transport oil from Cushing to refineries along the Gulf Coast, where much of it will be shipped overseas.

"Companies have been transporting crude from Cushing by truck and rail, but a pipeline is a heck of a lot faster," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Enbridge expects to bring 150,000 barrels a day to the Gulf's refineries by the second quarter of 2012 and to expand that to 400,000 barrels a day by early 2013.

Fears of another U.S. recession had knocked oil prices from their 2011 peak at $113.93, set on April 29.

But a variety of factors have since pushed prices back up, including a strengthening U.S. economy, potential supply concerns involving Iran and Nigeria and increased demand from developing economies in China, India and Latin America.

In other energy trading, heating oil lost 3.67 cents to finish at US$3.1346 a U.S. gallon (3.79 litres), gasoline futures rose 4.16 cents to close at US$2.6273 a gallon and natural gas fell 5.9 cents to close at US$3.483 per 1,000 cubic feet.

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