Crude Oil Breaks Through $100 a Barrel
Remember that October “deflation” that was driven by energy prices dropping (as reported 5 mintues ago)? You can forget it. As of seconds ago, WTI just passed $100 for the first time since July 26. This is another $200 billion in GDP that was just taken out. The market forecast now is global meltdowny with chance of QE3: 85/95%. And in fundamental news, Enbridge and Enterprise announced they would reverse the direction of crude oil flow from Cushing to the US Gulf. Hardly bearish for WTI prices and will likely lead to an even faster compression between Brent and WTI.
From the Enbridge press release:
Enbridge Inc. (“Enbridge”) and Enterprise Products Partners L.P. (“Enterprise”) today announced that they have agreed to reverse the direction of crude oil (NYSEARCA:USO) flows on the Seaway pipeline to enable it to transport oil from Cushing, Oklahoma to the U.S. Gulf Coast. Pending regulatory approval, the line could operate in reversed service with an initial capacity of 150,000 barrels per day by second quarter 2012.
“The Seaway Pipeline reversal provides an early opportunity to offer Gulf Coast access to midcontinent producers and other crude oil shippers,” said Patrick D. Daniel, President and Chief Executive Officer, Enbridge Inc. “A Seaway reversal will provide capacity to move secure, reliable supply to Texas Gulf Coast refineries, offsetting supplies of imported crude.”
Michael A. Creel, President and Chief Executive Officer of Enterprise’s general partner, said, “We congratulate Enbridge on its agreement to purchase a 50 per cent interest in Seaway. We believe that reversing the direction of crude oil movement on Seaway and the construction of additional infrastructure will accelerate access to Gulf Coast markets, reduce transportation costs, improve both producer and refiner economics and hasten the development of North America’s crude oil reserves.”
Following pump station additions and modifications, anticipated to be completed by early 2013, the capacity of the reversed Seaway Pipeline will be up to 400,000 barrels per day in mixed service. Enbridge and Enterprise expect that the reversed Seaway pipeline will be fully contracted. The partners anticipate conducting an open season to validate shipper support for an expansion of Seaway, through looping or twinning.
After reversing the direction that crude oil flows on the 500-mile (805-kilometer), 30-inch diameter, long-haul pipeline, Seaway will deliver crude from Cushing into the Houston-area market by utilizing existing affiliate and third-party pipelines as well as its Texas City local pipeline system. Enbridge and Enterprise plan to build a 45-mile (72-kilometer) pipeline that will link Seaway directly to Enterprise’s ECHO crude oil storage terminal located southeast of Houston. This will provide shippers with enhanced connectivity and more efficient transportation to the Houston refining market. Additional investment required by the joint venture partners to reverse the line and construct supporting lateral and related facilities is expected to be approximately $300 million.
Tyler Durden is the author of Zero Hedge.