LONDON: Oil fell for a third day on Thursday ahead of the expected reopening of a key North American pipeline that will restore crude supplies to US refiners. US regulators will allow the 670,000-barrel-per-day (bpd) Enbridge pipeline, which carries oil from Canada to the American heartland, to reopen on Friday following repairs after a one-week closure, pipeline company Enbridge Inc said. US crude futures for October, also known as WTI, fell to a low of $75 a barrel before recovering to around $75.25, down 77 cents, by 1153 GMT. The contract hit a one-month high above $78 on Monday on concerns over the Enbridge outage. The reopening of the pipeline will remove a major support for prices, which some traders predicted could now slip lower. "WTI will have to find something new to retest the recent highs at $78 per barrel," said Olivier Jakob, managing director of consultants Petromatrix in Zug, Switzerland. Edward Meir, senior commodity analyst at brokers MF Global, said the risk of hurricanes in the Gulf of Mexico could provide some support for a while, but this threat would soon disappear. "For the time being, WTI prices should continue trading within the $70-$80 range, but as we exit the hurricane season, defending downside support at $70 will become an increasingly difficult proposition," Meir said. The Pipeline and Hazardous Materials Safety Administration (PHMSA), which oversees US pipelines, has yet to confirm when the Enbridge pipeline will restart. The pipeline affected, Line 6A, is the main artery of Enbridge's Lakehead Pipeline System, the backbone of US oil imports from top supplier Canada. The line feeds refineries with a combined capacity of more than 1 million barrels per day (bpd) in the Chicago area and connects with a spur that reaches a key storage hub in Cushing, Oklahoma. The pipeline's Sept. 9 shutdown raised expectations that high inventories at Cushing would start to drain, bringing WTI more in line with strong values for European marker Brent. MARKET SHRUGS OFF STOCKDRAWS But drops last week in petroleum stockpiles held by the United States, the world's top oil consumer, did little to ease worries over a surplus of crude oil. US crude oil inventories fell last week by 2.49 million barrels to 357.37 million barrels, in line with expectations, and product stocks fell, according to a weekly report from the Energy Information Administration on Wednesday. US distillate stocks including diesel fell 340,000 barrels, against analyst expectations for a 300,000 barrel gain, while gasoline stocks fell 694,000 barrels, as expected. ICE Brent crude for November, the front month after October's expiry on Wednesday, declined just 9 cents to $79.33 by 1153 GMT, maintaining a big premium over WTI. Supplies of crude from the North Sea have been restricted since mid-summer due to maintenance work, helping support Brent prices relative to US crude. Supply is gradually rising. Crude oil output from nine of the main North Sea streams will increase by 9.9 per cent in October, according to data compiled by Reuters on Thursday from trading sources. Output in October is set to average 2.017 million barrels per day (bpd), up from 1.836 million bpd planned in September. Tropical Storm Karl hit Mexico's Yucatan Peninsula on Wednesday and could reach hurricane strength once it enters the Gulf of Mexico, where it could swing past major Mexican oil installations.

Source