Pipeline Setback Gives Oil a Lift

Crude climbs 74 cents to $110.88 a barrel.
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A disruption in a major U.S. oil pipeline and another downward move in the U.S. dollar nudged crude futures higher Monday.

The May-dated West Texas Intermediate crude contract climbed 74 cents to $110.88 a barrel after trading above $111 for most of the day. Brent crude rose 63 cents to $109.38 a barrel.

Reformulated gasoline gained a penny to close at $2.82 a gallon. Heating oil fell a hair to $3.19 a gallon, and near-term natural gas advanced 4 cents to $9.94 per million British thermal units.

Part of what lifted oil was the fact that

Royal Dutch Shell's

(RDS.A)

1.1 million barrel-a-day Capline pipeline has been shut in since a worker in Tennessee discovered a leak on April 11. The pipeline transports crude oil from Louisiana to Illinois and feeds

BP's

(BP) - Get Report

Whiting, Ind., refinery and a

Marathon Oil

(MRO) - Get Report

refinery in Catlettsburg, Ky.

A Shell representative said the company does not know when it will be able to bring the pipeline back online.

The falling dollar also gave support to crude futures. The U.S. dollar index slid 0.7% to 71.77. The index measures the performance of the greenback against a basket of international currencies. The price of oil tends to rise when the value of the dollar falls because oil is denominated in dollars in international markets.

After weeks of high volatility and uncertainty, oil futures appear to be again in an upward trend, according to analysts at Barclays Capital Research. Data released last week by the Commodity Futures Trading Commission showed that investors increased their net-long positions by 17,600 lots during the week ending April 8. It was the first weekly gain in net-long positions in four weeks, indicating that traders are finally regaining their confidence since commodity prices dove in mid-March.

However, Edward Meir, energy analyst at MF Global, wrote in a research note that "net length is still far below record levels, suggesting that long accumulation is proceeding at a hesitant clip at best."

Concerns surrounding weaknesses in the U.S. economy are encouraging energy traders to be cautious. The latest consumer confidence date released last Friday revealed the lowest figures since 1982. Plus, last week the International Energy Agency revised its previous estimate for total global energy demand in 2008 downward by 320,000 barrels a day, mostly due to gloomy projections for U.S. GDP this year.

Meanwhile, energy stocks followed commodities higher.

ConocoPhillips

(COP) - Get Report

climbed 1.3% to $79.64. Shares of

Exxon Mobil

(XOM) - Get Report

gained 1% to $89.45, and

Hess

(HES) - Get Report

soared 9.9% to $101.90.