A shutdown of a major oil pipeline in Illinois combined with a bigger than expected drop in US crude inventories helped push oil prices for benchmark crude scheduled for October delivery to $75.65, up by $1.40 from Thursday’s (September 9) settle price on the New York Mercantile Exchange.

A pipeline that transports 670,000 barrels of oil per day in Illinois experienced a leak on Thursday. The pipeline was shutdown as authorities try to uncover the source of the leak and make sure that conditions are safe for continued operations.

The shutdown coincided with the Thursday report from the Energy Information Administration that showed a 1.9 million barrel decline in crude inventories last week. This was a much steeper drop in inventory levels than was forecast by the McGraw-Hill Companies Platts survey of analysts. They had predicted a 730,000 barrel drop in production.

Along with a reduction in crude inventories, positive economic data in both Asia and the US supported the notion that oil demand could pick up in the near future. Japan posted a better than expected increase for its second quarter gross domestic product while China reported several positive news bites on its economy.

The US Labor Department reported Thursday that there was a decline in new claims for unemployment of 27,000 last week. The jobs market has become the most scrutinized component of the US recovery.

Analysts and investors are hoping that the reduction in new unemployment claims shows an improvement in the willingness of companies to add jobs, and to expand operations and production.

Bank of America projected a peak price for oil of $85 during the remainder of 2010. Buying interest following two days of mostly positive economic data and news that supports higher oil demand has been somewhat tempered.

Another week or two of job improvements and reduction in crude oil levels could produce a surge in speculative interest that might drive oil prices over $80 again.