By Grant Smith Sept. 17 (Bloomberg) -- Oil traded near a five-day low and headed for a weekly decline on speculation the restart of a crude pipeline in the U.S. will add to excess supplies. Futures are poised for a 2.3 percent drop this week after Enbridge Energy Partners LP received government approval to resume flowing oil on their Line 6A, which supplies refineries in the Midwest. The system will begin operating today, the company said. Petroleos Mexicanos, closed 14 offshore wells as Hurricane Karl bore down on Mexico’s east coast. “The oil price will remain stuck in a $70 to $80 range,” said Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich. “At first it looked like the Enbridge repairs would take a long time. Now it seems it will go fairly fast. Markets are very well-supplied and U.S. demand is lackluster.” The October contract on the New York Mercantile Exchange traded for $74.69 a barrel, 12 cents higher in electronic trading at 1:19 p.m. London time after gaining as much as 68 cents to $75.25 a barrel. Brent crude for November settlement traded up 48 cents at $78.96 a barrel on the London-based ICE Futures Europe exchange. Karl became a “major” hurricane, packing winds of 120 miles (195 kilometers) per hour and bearing down on Mexico’s east coast. It is now a Category 3 storm on the five-step Saffir-Simpson scale, the National Hurricane Center said in an advisory at 7 a.m. Mexico City time. Winds have increased from 100 mph late yesterday, and the storm’s eye was 50 miles northeast of Veracruz, Mexico, the center said. Pipeline Rupture Oil futures topped $78 a barrel this week following the closure on Sept. 9 of Enbridge’s 466-mile Line 6A. The pipe spilled about 6,100 barrels of oil from a section in Romeoville, Illinois, about 30 miles southwest of Chicago. The 34-inch line runs from Superior, Wisconsin, to Griffith, Indiana, and can carry 670,000 barrels a day of crude, equal to more than one- third of Midwest imports. Goldman Sachs Group Inc. said in a report today that the pipeline’s closure will keep U.S. crude oil imports at reduced levels in coming weeks. “As the tide turns, we will see lower inventories and shifting sentiment send WTI crude oil prices into a $85-$95 per barrel trading range in coming months,” the report said. Contango Widens The discount for October delivery oil to December supplies has increased as traders expect a short-lived disruption. This price structure is known as contango. The difference has widened from $1.81 a barrel to $3.02 today. “The contango has widened back out again,” said Michael Haigh, global head of commodities research at Standard Chartered Plc in Singapore. “That’s the market’s way of saying people are bidding for storage again and things can go down.” OPEC will reduce crude shipments by 1.2 percent this month as the global recovery slows and refiners in the U.S. and Europe finish maintenance, Oil Movements said, the ninth weekly decline reported by the tanker-tracker. The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude oil, will ship 23.2 million barrels a day in the four weeks to Oct. 2, down from 23.47 million in the month to Sept. 4, the Halifax, England-based consultant said yesterday in a report. The data exclude Ecuador and Angola. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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