Crude Oil Trades Above $119 After Fire Shuts BP Turkey Pipeline

By Grant Smith

Aug. 6 (Bloomberg) -- Crude oil futures traded little changed above $119 a barrel after a Turkish section of a BP Plc- led pipeline for Azeri crude was shut by an explosion.

The cause of the blast and the timing of the resumption of flows were unclear, a spokesman at the Ankara-based Energy Ministry said. BP and its partners shipped almost 1 million barrels a day through the Azerbaijan-Turkey link in May.

``It's a huge pipeline and European consumers' dependency on it is increasing,'' said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. ``After dropping $30 in four weeks it's easily possible for things like this to increase prices.''

Crude oil for September delivery traded down 3 cents at $119.13 a barrel in electronic trading on the New York Mercantile Exchange. Earlier, the contract rose as much as 83 cents, or 0.7 percent, to $120 a barrel.

Yesterday, the contract settled at $119.17 a barrel in New York after dropping to $118, the lowest level since May 5.

The Baku-Tblisi-Ceyhan pipeline may reopen next week after repairs, which will take ``a few days,'' are completed, said Mehmet Akif Sam, spokesman for the Energy Ministry.

BP spokesman Robert Wine in London said there is no impact on exports from Ceyhan and that the company is starting up another pipeline from Baku as an alternative export route.

Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, according to a MasterCard Inc. report yesterday.

China Economy

The U.S. Energy Department may say in its weekly report today that gasoline supplies fell 1.5 million barrels last week, a Bloomberg survey predicted.

The economy in China, the world's second-largest energy user, grew at the slowest pace since 2005 in the second quarter while manufacturing in July contracted for the first time since a survey began in 2005.

Tropical storm Edouard was downgraded to a depression after it made landfall on the Texas coast and missed oil-production areas in the Gulf of Mexico.

The Organization of Petroleum Exporting Countries boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net