UPDATE 11-Oil rises as ice, fog slow U.S. crude flows
(Updates prices, paragraph 3)
NEW YORK Dec 11 (Reuters) - Oil prices leapt to $90 on Tuesday as a deadly Midwest ice storm briefly paralyzed several big pipelines feeding a key U.S. crude storage hub and fog delayed shipping along the Texas coast, traders said.
A decision by the U.S. Federal Reserve to cut interest rates by a quarter percentage point [ID:nN11490317] was also seen as supporting commodities prices by potentially reviving economic growth and weakening the value of the dollar.
U.S. oil CLc1 settled up $2.16 at $90.02 per barrel, while London Brent crude LCOc1 rose $1.95 to $89.99.
"Today is mostly about ice and fog, and less about the Fed cut," said Peter Beutel, president of Cameron Hanover in New Canaan, Connecticut.
A deadly ice storm in the U.S. heartland brought operations at the Cushing, Oklahoma, storage hub -- delivery point for U.S. crude futures -- to a near standstill for several hours on Tuesday. [nN11501709]
The storm knocked out power to more than 800,000 customers and forced Enbridge (EEP.N) and TEPPCO to shut more than 20 million barrels of oil terminal storage. Several pipelines, including the Seaway pipeline that carries 350,000 barrels per day from the Gulf Coast, also reduced or halted throughput, before restarting later in the day.
Adding support, fog along the Texas coast delayed more than 60 vessels from entering the nation's biggest petrochemical ports. Officials said some traffic resumed early Tuesday, but they added that the fog could return.
Sea fog is common along the Gulf Coast during the autumn and winter and sometimes can become severe enough to disrupt crude supplies and force refineries to slow fuel production.
Soupy fog in late November triggered a slowdown in oil imports that helped push U.S. crude inventories to their lowest level since March 2005. [EIA/S]
"I think the market is way up, not so much on supply and demand issues, but rather getting supplies from point A to point B. We have had fog in the Gulf, pipeline (snags), ice storms," said Phil Flynn, an analyst at Alaron Trading in Chicago.
The outages helped end a slump that had dragged oil prices off a record high above $99 a barrel in November amid concerns that a slowdown in the U.S. economy could damp demand growth in the world's top consumer.
The U.S. Energy Information Administration on Tuesday slashed its estimate of world oil demand growth for the first quarter of 2008 by 260,000 bpd, with total demand estimated at 87.44 million bpd. [ID:nWAT008571]
But it said it still expected the world energy market to be tight in 2008.
U.S. crude oil inventories, running at their lowest since March 2005, were thought to have slipped by 200,000 barrels during the week to Dec. 7, according to a Reuters poll ahead of data due Wednesday. [EIA/S]
(Additional reporting by Santosh Menon in London; Angela Moon in Seoul) (Editing by David Gregorio)
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