Oil tops $100 on seaway pipeline reversal

Oil in New York climbed above $100 a barrel to a five-month high as Enbridge Inc. said it would reverse the direction of the Seaway pipeline, opening an outlet for crude from the central U.S. and Canada.

Futures rose as much as 2.9 percent after Enbridge agreed to acquire ConocoPhillips (COP)’s share of the pipeline that runs between Cushing, Oklahoma, and the Gulf Coast and announced the reversal. The change may alleviate a bottleneck at the Cushing storage hub that had lowered the price of West Texas Intermediate, the grade traded in New York, versus other oils. The pipeline will enable more oil from Canada and North Dakota to reach the Gulf Coast, home to about half of U.S. refining capacity.

Oil briefly pared gains after the U.S. Energy Department reported that crude supplies at Cushing rose 890,000 barrels to 32 million last week. Total crude oil stockpiles fell 1.06 million barrels to 337 million in the week ended Nov. 11, according to the report released at 10:30 a.m. in Washington.

Crude oil for December delivery on the New York Mercantile Exchange reached $102.28, the highest level since June 9. The contract traded at $99.70 before the Seaway announcement.

Brent oil for January settlement dropped 24 cents to $112.42 a barrel on the ICE Futures Europe exchange in London. The European contract’s premium to West Texas crude narrowed to as little as $8.32 a barrel, the smallest spread since March 9. The spread surged to a record high of $27.88 on Oct. 14.