* Trans Alaska pipeline shut, no restart date set
* U.S. heating demand seen up this week, lifts heating oil
* Coming up: API inventory data, 4:30 p.m. EST Tuesday
(Recasts, updates prices and market activity, changes byline
and moves dateline from previous LONDON/SINGAPORE)
By Robert Gibbons
NEW YORK, Jan 10 (Reuters) - U.S. oil prices rose more than
1 percent on Monday after a leak shut the Trans Alaska
Pipeline, which carries nearly 12 percent of domestic crude
output.
The pipeline closed on Saturday because of a leakage at a
pump station booster in Prudhoe Bay, forcing producers to cut
output to 5 percent of their daily average of 630,000 barrels.
[]
No restart date has been set, the Alaska Department of
Environmental Conservation said. The plan is to build a bypass
line and use that to restart the system, it said.
[] Federal regulators also had no restart
timetable.
The spread between London's ICE Brent and U.S. crude prices
<CL-LCO1=R> seesawed, narrowing early then widening to over $6
a barrel as Brent gained more than its U.S. counterpart.
U.S. heating oil had the strongest percentage gains in the
oil futures complex, lifted by a government forecast for total
heating demand to be 10.5 percent above normal and for heating
oil demand to average 4.2 percent above normal this week.
[]
U.S. crude oil for February delivery <CLc1> rose 90 cents,
or 1.02 percent, to $88.93 a barrel by 12:51 p.m. EST (1751
GMT), off an early peak of $89.98.
Trading volume in U.S. crude futures totaled more than
629,000 lots by midday in New York, following Friday's tally of
over 1 million lots and already near the 250-day average of
670,020 lots, Reuters data showed.
In London, ICE Brent crude for February <LCOc1> rose $1.72
to $95.05 a barrel, having traded as high as $95.88.
"Of course a pipeline with a magnitude like that
is supportive for crude prices. It is normal that first the
market reacts a bit too much. But then it is a question of how
long the line will be closed," said Hannes Loacker, an oil
analyst at Raiffeisen Bank International.
There was some expectation that government regulators on
guard after the massive Gulf of Mexico oil spill last spring
could take more time than usual to allow a pipeline restart.
Lawrence Eagles of JP Morgan said that from an engineering
perspective, he doubted any shutdown would last more than two
to three days.
"However, government inspectors are likely to want a more
comprehensive understanding of the cause," he said, adding that
the outage could last a week or more as a result.
"One of the clear messages from the Macondo oil spill in
the Gulf of Mexico is that unplanned outage assessments will
have to be increased going forward."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a list of incidents at the pipeline: []
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BRENT/U.S. CRUDE SPREAD
The premium of Brent over U.S. crude rose back above $6 a
barrel, after the spread <CL-LCO1=R> fell to $5.30 based on
Friday settlement prices.
The spread reached as much as $6.56 intraday on Thursday,
the widest since May 3, 2010.
Brokers and analysts have cited funds being attracted to
Brent's stronger, backwardated price as helping lift its
premium to U.S. crude, along with lower exports from Nigeria
and Europe's cold weather.
"Brent has been lifted by the unusually cold weather in
Europe coming on top of the French refineries being affected by
strikes that tightened supplies, so refiners are looking for
higher-yielding sweet crudes," said Phil Flynn, analyst at
PFGBest Research in Chicago.
The Brent/U.S. spread narrows in March and other nearby
months.
EURO/DOLLAR VOLATILE
Dollar strength limited gains in oil early as concerns
about Portugal's debt weakened the euro, but the single
currency later bounced and the dollar index <.DXY> fell.
The euro underwent a technical correction after falling to
lows not seen since mid-September. []
A weaker dollar can lift dollar-denominated oil prices
because it makes crude less expensive for consumers using other
currencies.
(Additional reporting by Dmitry Zhdannikov in London and
Alejandro Barbajosa in Singapore; Editing by Dale Hudson)
