Crude oil prices edged higher by 0.9 percent last week as traders weighed the potential impact of sanctions on Russia for its efforts in annexing Crimea and decent U.S. economic data with continued sluggishness in China. Further, crude spills tend to give oil a lift as traders speculate about any supply restrictions, so a leak reported last Monday in southern Ohio was supportive of crude prices. This Monday, a bigger oil blowout occurred in Texas, shutting down one of the busiest oil thoroughfares in the country.
The Ohio leak, in a Sunoco (SU) pipeline operated by Mid-Valley Pipeline Company, caused about 10,000 gallons of oil to collect in the Oak Glen Nature Preserve just north of Cincinnati, Ohio. Experts suspect that the 5-inch crack in the 20-inch pipe that runs from Texas to Michigan actually started leaking several days before its discovery based upon residents in the area saying they smelled gas for days, although no one reported it. An investigation showed the oil to have seeped into a nearby creek and floated to the marshland where it eventually pooled. The Environmental Protection Agency reported on Friday that approximately 9,100 gallons of oil and contaminated water had been removed from the site.
In 2012, Mid-Valley Pipeline was hit with a fine of nearly $50,000 for not addressing corrosion problem with the 64-year-old pipeline. USDOT records show that the pipeline has had 39 incidents since 2006, resulting in more than $7.5 million in damages.
The unseasonably cold weather this winter may have played a role in containing the spill. Air and water quality tests in Colerain Township have shown no contamination to date and no signs that the oil spill made its way into the Great Miami River about 500 feet away. Only one salamander was found covered in oil. Other than that, no animals appear to have been affected by the spill.
To the south, a barge transporting about 900,000 gallons of crude oil collided with a ship in the Houston Shipping Channel near Texas City on Saturday, dumping roughly 170,000 gallons of the tar-like oil into the water. The channel, which connects Galveston Bay and the Gulf of Mexico and is part of the uber-busy Port of Houston, was closed on Saturday for investigation and cleanup, with no timetable for re-opening. Oil has been found up to 12 miles offshore in the Gulf of Mexico.
The Port typically handles about 80 ships per day and, according to the Associated Press, and has about 60 ships either blocked in or blocked out with the closure. The U.S. Coast Guard said that two cruise ships were allowed through the incident area for passenger convenience and to “limit economic impacts from the spill” (read as “avoid potential lawsuits”). If the port stays closed, oil prices could continue to feel short-term upside pressure.
With its remaining contents moved to other vessels, the barge with the ruptured storage tank has been taken to a nearby shipyard. The barge company is taking responsibility for the costs of the accident. Six crewmembers of the tow vessel were injured and less than 10 birds have been found dead or injured.
More soft economic data from China is not keeping oil down against the backdrop of the latest oil spill and Crimea conflict. HSBC’s “flash” Purchasing Manager’s Index for China dipped to 48.1 in March from 48.5 in February, signaling that manufacturing activity in the world’s second-biggest economy is contracting even faster this month.
Crude for May delivery is ahead by 0.5 percent at $99.93 as of 2:09 PM EDT.
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