* Enbridge repairs to key Line 6A pipeline nearly done
* Dollar weakens, supportive to crude early
* API reports crude stocks rose sharply last week
* Coming up: EIA oil data 10:30 a.m. EDT Wednesday (Updates with API inventory report results, comments, paragraphs 11, 18-21)
By Robert Gibbons
NEW YORK, Sept 14 (Reuters) - Oil prices fell on Tuesday after Enbridge Inc said repairs to its key Line 6A pipeline bringing Canadian crude oil to the United States were nearly complete and it hoped to gain approval to resume shipments.
A spokeswoman also said Enbridge
After crude settled in New York, U.S. government regulators said Enbridge will not be allowed to restart its 670,000 barrels per day Line 6A that leaked in Illinois last week until the government deems it safe. [ID:nN14275221]
U.S. crude for October delivery
In afternoon trading in New York, U.S. crude oil futures trading volume was at about 850,000, 32 percent above the one-year average, according to Reuters data.
ICE October Brent crude
"The news that the Enbridge pipeline will restart soon had a lot to do with the downward momentum in crude oil futures," said Phil Flynn, analyst at PFGBest Research in Chicago.
U.S. oil prices had surged Monday on the ongoing shutdown of Calgary-based Enbridge's 670,000 barrel per day Line 6A, the biggest Canada-U.S. pipeline.
Enbridge shutting the crude oil pipeline to New York state on Monday followed last week's leak in Illinois that shut the Line 6A that brings Canadian crude to U.S. Midwest refineries and the crucial Cushing, Oklahoma, oil hub.
The Line 6A leak occurred just six weeks after Enbridge's Line 6B pipeline ruptured in Michigan. Line 6B also remained shut, awaiting regulatory approval to restart.
"The seeming resolution of the Enbridge pipeline situation let the air out of the story and prices. But there may be growing questions about the overall state of the nation's infrastructure given Enbridge and the natural gas explosion in California," said John Kilduff, partner at Again Capital LLC.
WEAK DOLLAR
Trading sources said the weak dollar boosted crude prices earlier to near $78 a barrel.
The dollar slid to a 15-year low against the yen. The euro hit a one-month peak against the greenback and the dollar index weakened.
The Chinese yuan rose, hitting a post-revaluation peak against the dollar. Beijing was seen letting the yuan rise as U.S. lawmakers called for a vote on a bill to get tough with China over its slow exchange rate reform.
U.S. retail sales data and a government report showing growing business inventories supported oil prices earlier.
Gold hit record highs above $1,270 an ounce in its biggest one-day rally in four months, as the U.S. dollar declined broadly after the upbeat data failed to convince investors to shift into risk-linked assets. [GOL/]
INVENTORIES
Traders also eyed a system that became Tropical Storm Karl in the western Caribbean Sea, [ID:nN14262276] and awaited weekly inventory reports from industry and government.
After the market settled, the industry group American Petroleum Institute reported crude inventories rose 3.3 million barrels last week, against an expected draw.[API/S]
The API said gasoline stocks fell 963,000 barrels and that distillate stockpiles fell 1.5 million barrels.
Crude futures extended losses slightly in post-settlement trading after the report, ending post-settlement trading down 53 cents at $76.66 a barrel.
A Reuters survey of analysts had yielded a forecast for crude stocks to be down 2.2 million barrels, gasoline stocks down 700,000 barrels and distillate stocks up 300,000 barrels. [ID:nN14123396]
While gasoline stocks were expected to have fallen last week, MasterCard said U.S. retail gasoline demand fell 3.2 percent last week versus the previous week. [ID:nN1456122]
The U.S. Energy Information Administration's inventory report is due on Wednesday at 10:30 a.m. EDT (1430 GMT). (Additional reporting by Gene Ramos in New York, David Turner in London and Alejandro Barbajosa in Singapore; Editing by David Gregorio)