LONDON, Nov 29: World oil prices rebounded strongly on Thursday after a fire struck a key pipeline linking Canada with the United States, which is the biggest energy consumer in the world.

Oil futures had tumbled on Wednesday on a smaller-than-expected decline in US energy reserves and ahead of next week’s Opec meeting, where the 13-member producers’ cartel will make a decision on its output policy.

In late afternoon trade on Thursday, New York’s main contract, light sweet crude for January delivery, jumped $1.80 to $92.42 a barrel.

London’s Brent North Sea crude for January surged $1.35 to $91.16.

Enbridge Inc said late Wednesday that an explosion in the northern US state of Minnesota forced the company to shut down four pipelines.

Enbridge’s oil pipeline system serves major refineries in Canada’s Ontario province as well as the Great Lakes region of the United States, delivering about 2.2 million barrels per day.

“News of an explosion at the Enbridge Minnesota terminal will resurrect supply concerns,” said Bank of Ireland analyst Paul Harris.

At Barclays Capital, Kevin Norrish added: “We believe that the incident is potentially very serious and will certainly result in increasing downwards pressure on US crude oil inventories.” In Paris, the head of the International Energy Agency, Nobuo Tanaka, said the IEA was closely “monitoring” the situation but described the incident as “not substantial.”Nevertheless, he added, “if necessary we will use our emergency measures.”

On Wednesday, oil prices had closed more than $3 lower in New York owing to the latest data on US energy inventories.

The US Department of Energy (DoE) said US crude inventories had fallen by 400,000 barrels in the week to November 23. Analysts had forecast a drop of 1 million barrels.

Meanwhile, stocks of distillates, which include heating fuel, shed only 100,000 barrels last week. The market forecast had been for a drop of 1.2 million.

Distillate stocks are being closely watched in the run-up to the northern hemisphere winter, when demand for heating fuel tends to soar.

The DoE added that US refinery usage jumped to 89.4 per cent of capacity, up 2.4 percentage points compared with a week earlier.

“Crude futures were sharply lower on Wednesday, following the weekly US fuel inventories report,” Sucden analyst Michael Davies said on Thursday.

Oil prices have been volatile since reaching almost $100 a barrel last week when New York crude struck a record high of $99.29 on concerns over tight oil supplies.

The market, meanwhile, is gearing up for next week’s Opec output meeting in Abu Dhabi. Saudi Oil Minister Al-Nuaimi on Wednesday insisted the world oil market was well supplied and that high prices did not properly reflect the supply-demand situation.

Asked whether Saudi Arabia, the world’s biggest oil exporter, would push for an increase in production at next Wednesday’s meeting, Nuaimi said the cartel would first need to see market data.—AFP