London oil rises on pipe leak, US inventory worry

LONDON, Apr 17 (Reuters) Benchmark Brent crude rose on Tuesday as a leak on a Canadian oil pipeline to the United States helped recoup some losses made on news that Nigeria planned to restart fields shut for a year by militant attacks.

Also hanging over the market is concern about U.S. gasoline stocks after nine weeks of falling inventories and with a further drop expected in weekly data due on Wednesday.

London Brent crude rose 52 cents to $67.77 a barrel by 0919 GMT, after falling $1.38 on Monday.

Traders say Brent currently better reflects the global market than landlocked benchmark U.S. crude, which has been held down by swollen stocks at its delivery point and was up 47 cents at $64.08, after ceding only 2 cents on Monday.

Any lasting disruption to Enbridge Inc's pipeline from Canada could help drain the unusually large stocks that pushed Brent's premium over U.S. crude to a record of near $7 last week. It has now narrowed to below $4.

''There's no news on when the pipeline's going to come back, but even if it turns out to be a relatively short term disruption, it's a lot of crude,'' said Mike Wittner, Global Head of Energy Market Research at investment bank Calyon.

''Gasoline concerns are still there and the markets will be starting to look ahead to the weeklies.'' Part of Enbridge's 450,000 barrels per day (bpd) Line 3, the main route for Canadian crude to refineries in the U.S. Midwest, sprung a leak on Sunday night and was shut, the company said.

A spokeswoman was unable to estimate current pumping rates or say how long the disruption could last.

A weakening dollar might also help support prices with producers, who get paid in dollars, worried about the impact on their profits. The dollar traded below $2.00 to the pound for the first time in 15 years on Tuesday.

NIGERIA TO RESTART OUTPUT Oil prices fell sharply on Monday after a source with Nigeria's state oil firm said Royal Dutch Shell would resume production from its 380,000 bpd Forcados field by the end of April. the oilfield was shut in February 2006.

Traders are still keeping a close eye on Nigeria, the world's eighth-largest exporter, for fear that violence over elections could further disrupt oil output, which has already been cut by one-fifth for more than a year.

Around 50 people were killed during flawed state elections at the weekend, ahead of the April 21 presidential vote. Adding to uncertainty, the Supreme Court cleared a last minute bid for the presidency by Vice President Atiku Abubakar.

Nigeria's light, gasoline-rich crude will be in demand to make the motor fuel ahead of peak summer demand in the northern hemisphere.

Oil rallied last week on concerns over U.S. gasoline inventories, which have fallen due to refinery outages and strong demand.

Analysts polled by Reuters said they expected U.S. gasoline stocks to have dropped by a further 2 million barrels last week in government data due on Wednesday, despite the return of some refineries from seasonal maintenance shutdowns.

REUTERS SR RN1507