Oil prices jumped above $89 a barrel on Monday in Asia after a pipeline leak cut Alaskan crude output.
Benchmark oil for February delivery rose $1.35 to $89.38 a barrel midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 30 cents to settle at $88.03 in Friday.
The 1,300 km trans-Alaska pipeline, which normally carries between 630,000 and 650,000 barrels a day, was shut Saturday after a leak was discovered at a North Slope pump station, said Alyeska Pipeline Service Co., which manages the line. North Slope production was reduced to 5 percent of normal.
Alyeska Pipeline said cleanup crews have contained the leak, but the company didn’t know when the pipeline would restart operations.
“The 95 percent drop in output from Alaska is bullish,” energy consultant The Schork Report said. “Such high levels of uncertainty will have traders scrambling.”
The jump in crude prices will likely be temporary unless the pipeline is down for an extended period, The Schork Report said.
“We don’t believe the news as it stands is enough to push crude oil above the $100 barrier,” The Schork Report said. “If production is reduced to 5 percent until March or April, then we’ll change our mind.”
In other Nymex trading in February contracts, heating oil gained 2.4 cents to $2.51 a gallon while gasoline futures added 2.3 cents to $2.44 per gallon. February natural gas futures slid 2.0 cents to $4.40 per 1,000 cubic feet.
In London, Brent crude was up 79 cents to $94.12 a barrel on the ICE Futures exchange.