* Front-month WTI discount shrinks against second month
* Enbridge leak size, shutdown duration still unclear
* China's August crude oil imports rise 13 pct
* Coming Up: U.S. Wholesale inventories July; 1400 GMT
(Adds comments, on Canada oil glut, updates prices)
By Alejandro Barbajosa
SINGAPORE, Sept 10 (Reuters) - U.S. crude approached a
three-week high near $76 after a leak forced Enbridge to shut
down the biggest pipeline supplying Canadian oil to refineries
in the Midwest and to a key storage hub in Oklahoma.
Enbridge Inc closed its 670,000 barrel per day (bpd) Line
6A, the largest of the company's major three, after a leak was
discovered near Romeoville, Illinois. The duct accounts for
between 7-8 percent of total U.S. crude imports.
[]
Front-month U.S. crude for delivery in October <CLc1> rose
$1.18, or 1.6 percent, to $75.43 a barrel at 0701 GMT, after
touching $75.96 on Thursday, the highest intraday price since
Aug. 19. The November contract <CLc2> added 64 cents to $76.43.
Contracts further out were little changed or fell after a
Thursday government report showed total U.S. petroleum
inventories climbed to a fresh all-time high on a weekly basis.
Record stockpiles at the world's largest oil-consuming nation
have this month depressed the price of U.S. benchmark West
Texas Intermediate (WTI) crude relative to European Brent
<LCOc1>.
"Some people had been selling WTI and buying Brent crude,
but now they are covering their shorts, and thereby they have
to buy back WTI at the front of the curve," said Tetsu Emori, a
fund manager at Tokyo-based Astmax Co Ltd.
The shutdown of the Enbridge pipeline might help ease a
glut at the Cushing, Oklahoma, pricing point, majorly supplied
with Canadian oil. That was reflected on Friday by the
reduction of an unusual discount of WTI to October ICE Brent,
which climbed just 5 cents to $77.52.
Canada is the largest oil exporter to the U.S. and
Enbridge's pipelines carry the lion's share of that crude.
BRENT PREMIUM SHRINKS
Brent posted its biggest premium to WTI since mid-May
earlier this week at more than $3.50 a barrel, shrinking on
Friday to about $2.15.
"As soon as there are signs of a continued recovery from
U.S. economic data or that oil inventories are falling, it
should have a good impact on (U.S.) crude prices," Emori said.
Asian stocks rose to a four-month high on Friday as some
investors were inspired by positive U.S. and Japanese economic
data to pick out bargains, with the shift to riskier assets
weighing on the yen. [] []
Despite the increase in overall U.S. petroleum inventories
last week, crude stockpiles dropped 1.85 million barrels to
359.9 million in the week to Sept. 3 as imports declined and
refineries processed more crude, the Energy Information
Administration reported on Thursday. []
"A decrease in crude inventories is psychologically a
supportive factor," Emori said.
Inventories at the key Cushing hub fell by 218,000 barrels
to 35.54 million barrels.
The spread, or the discount of front-month WTI crude to the
second month, shrank to about $1 on the Enbridge news from
almost $1.80 a barrel earlier this week, flattening a market
structure known as contango, where prompt oil is cheaper than
future supplies. For a graphic:
http://graphics.thomsonreuters.com/AS/0810/NT_20101009102846.jpg
Though the size of the Enbridge spill or the duration of
the outage are not yet known, fire officials said the line was
shut early in the afternoon and that the oil has been
contained.
Line 6A, which carries light, medium and heavy crudes, as
well as synthetic oil from northern Alberta's oil sands, runs
from Superior, Wisconsin, to Griffiths and supplies oil to
refineries in the Chicago region, as well as to the storage hub
at Cushing.
CANADA GLUT
The outage is likely to exacerbate an oil glut in Canada as
producers there struggle to place supplies in markets abroad,
said JP Morgan analysts headed by Lawrence Eagles.
"While (WTI) has been the big talking point, the real
pressure from the WTI bottleneck has been the collapse in
prices over the border, where the logjam has resulted in West
Canadian Select crude trading as low as $50 a barrel," JP
Morgan said in a note.
Thursday's incident comes just six weeks after Enbridge was
forced to shut down another smaller part of its Lakehead
system, which the U.S. government has not yet allowed to resume
operations amid heightened scrutiny of spills after BP Plc's
<BP.L> Gulf of Mexico spill.
U.S. distillate stocks fell 388,000 barrels last week,
according to the EIA, against analyst expectations for a
600,000 barrel rise, while stocks of gasoline fell 243,000
barrels compared with forecasts for a larger draw of 900,000
barrels.
Storms are expected to cause losses of about 20 million
more barrels of U.S. crude oil production in the Gulf of Mexico
before the Atlantic hurricane season ends on Nov. 30, the
Energy Information Administration said Thursday. []
Oil imports by China, the world's second-largest petroleum
user, rose 13 percent in August from a year earlier. China
brought in 20.9 million tonnes of crude from abroad last month,
and imports for the first eight months gained 22.6 percent to
157.87 million tonnes, the General Administration of Customs
said on its website. []
China's National Bureau of Statistics will release its
monthly suite of economic data including industrial production,
consumer and producer prices and retail sales on Saturday,
Sept. 11, at 0200 GMT. []
(Editing by Manash Goswami)
