Oil prices surge as Alaska pipeline stays shut

New York's main contract, light sweet crude for February delivery, jumped by $1.86 to $91.11 a barrel by the close of trading.

In London, the price for Brent crude from the North Sea settled at $97.61, up $1.91. Earlier it reached $97.82, its highest level since October 1, 2008.

The US Energy Information Administration released its forecast for 2011, predicting that crude prices would average $93 a barrel over the year.

"EIA expects the price of West Texas Intermediate (WTI) crude oil to average about $93 per barrel in 2011, $14 higher than the average price last year," the government agency said in a release.

"For 2012, EIA expects WTI prices to continue to rise, with a forecast average price of $99 per barrel in the fourth quarter 2012."

The continuing shutdown of the key Alaska pipeline was the main news in New York trading Tuesday.

"There is some uncertainty surrounding the pipeline leak in Alaska. There has not been any clarity about when it would be resolved," said Matt Smith of Summit Energy.

Smith said that US oil supplies are generally strong, but that the lack of information on how long the pipeline will remain closed nevertheless impacted prices.

"Until we have more clarity around that, there is going to be a premium in prices," he said.

The 800-mile (1,300-kilometer) pipeline delivers between 630,000 and 650,000 barrels per day of crude produced in the Arctic region to Valdez port in the southern part of Alaska, where it is loaded onto tankers for delivery to the US mainland.

Alyeska, the operator, closed the pipeline after discovering oil leaking into a station pump on Saturday.

North Slope producers were forced to cut back production by up to 95 per cent while the pipeline was closed down.

Alyeska earlier said there was no apparent impact on the environment as a result of the leak.

The oil price also got a boost from winter storms along the East Coast, threatening to blanket New York with snow on Tuesday night.