By CHRIS KAHN
AP Energy Writer
NEW YORK (AP) - Oil prices hit $100 per barrel for the first time in nearly four months as U.S. supplies dropped, and a pipeline deal promised to cut them further.
Prices have soared 26 percent since the end of September as the U.S. economy improves and tensions rise in countries that hold some of the world's major sources of crude.
The price of U.S. benchmark crude crossed the $100 mark early Wednesday, rising $2.85 to $102.22 per barrel in New York.
They jumped Wednesday by another 2.6 percent after a Canadian pipeline company announced it would ship crude away from a key delivery point in the Midwest.
The delivery point in Cushing, Okla. has been historically oversupplied with little access to international oil markets. That appeared to change Wednesday when Enbridge Products Partners L.P. announced it bought a 50 percent stake in the Seaway pipeline from ConocoPhillips for $1.15 billion. The company plans to use it to transport oil from Cushing to refineries along the Gulf Coast, where much of it will be shipped overseas because of rising demand from Latin America.
"Companies have been transporting crude from Cushing by truck and rail, but a pipeline is a heck of a lot faster," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
Enbridge expects to bring 150,000 barrels per day to the Gulf's refineries by the second quarter of 2012. It's expected to be expanded to 400,000 barrels per day by early 2013.
Fears of another U.S. recession had knocked oil prices from their 2011 peak at $113.93, set on April 29. But a variety of factors have pushed prices back up.
-The U.S. appears to have avoided a recession, for now: During the past several weeks, economic reports have shown that consumers are spending more, and manufacturing activity continues to grow.
-Supplies could tighten: Iran, the world's fourth-largest oil exporter, is suspected of developing nuclear weapons, according to a United Nations report earlier this month. Its nuclear program could lead to international trade sanctions, and Israel has threatened military action. Companies operating in Nigeria also say that oil production has been hurt by spills, sabotage and outright thefts. Nigeria is one of the top five oil exporters to the U.S. In America, crude stockpiles are already tight, with storage levels in Cushing, Okla. 6 percent lower than their 5-year average. And now Enbridge plans to send more of that oil to the Gulf, where much of it is expected to be refined into fuel and then exported to other countries.