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UPDATE 7-Oil prices rise on nagging fears of fuel shortages

05/11/2021 01:33
UPDATE 7-Oil prices rise on nagging fears of fuel shortages

Colonial aims for substantial resumption in operations this week

COVID-19 outbreak hits Indian fuel demand

Coming up: American Petroleum Institute data at 4:00 p.m. EDT

New throughout, updates prices, market activity and comments to settlement

By Laura Sanicola

- Oil prices settled higher on Tuesday, as lingering fears of gasoline shortages due to an outage at the largest U.S. fuel pipeline system after a cyber attack brought futures back from an early drop of more than 1%.

Brent crude LCOc1 futures rose 23 cents, or 0.3%, to settle at $68.55 a barrel while U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 36 cents, or 0.6%, to end the session at $65.28.

Benchmark gasoline futures prices RBc1 ended the session 0.3% higher at $2.1399 a gallon.

On Monday, Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, said it was working to restore much of its operations by the end of the week.nL1N2MX1MXnL4N2MW0BW

"While the short-term risk is being played down, the market is still visibly shaken by the event, given the nature of the attack and the scale of the infrastructure," said Rystad Energy's oil markets analyst Louise Dickson.

"The market is now concerned about the likelihood of such an event being repeated and about the severity of future attacks."

Fuel supply disruption has driven gasoline prices at the pump to multi-year highs and demand has spiked in some areas served by the pipeline as motorists fill their tanks. nL1N2MY0WQ

"With little information forthcoming from the private company, the market appears to be proceeding on the assumption that normal flows will resume by the upcoming weekend and since no operational problems appear to exist, this guidance would appear correct." said Jim Ritterbusch, president of Ritterbusch and Associates.

Traders booked at least four tankers to store refined oil products off the U.S. Gulf Coast refining hub after a cyber attack that knocked out the pipeline, shipping data showed on Tuesday. nL1N2MY0M5

North Carolina, the U.S. Environmental Protection Agency and Department of Transportation issued waivers allowing fuel distributors and truck drivers to take steps to try to prevent gasoline shortages. nW1N2MD003

OPEC on Tuesday raised its forecast for demand for its crude by 200,000 bpd and stuck to its prediction of a strong recovery in global oil demand this year as growth in China and the United States counters the coronavirus crisis in India. nL9N2ID012

Meanwhile, the rapid spread of infections in India has increased calls to lock down the world's second-most populous country and the third-largest oil importer and consumer.nL4N2MY0OBnL1N2MX05R

India's top state oil refiners have already started reducing runs and crude imports as the new coronavirus cuts fuel consumption, company officials told Reuters on Tuesday. nL1N2MY0ES

On the bullish side for crude, analysts are expecting data to show U.S. inventories fell by about 2.3 million barrels in the week to May 7 after a drop of 8 million barrels the previous week, a Reuters poll showed. nL4N2MX3U4

Gasoline stocks are expected to have fallen by about 400,000 barrels, analysts estimated ahead of reports from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday.

Indian oil refiners cut output, imports as pandemic hits demandnL1N2MY0ES

U.S. government working to aid top fuel pipeline operator after cyberattacknL1N2MW05X

EXPLAINER-Will Colonial fuel pipeline shutdown mean U.S. pump prices rise? nL4N2MW0BW

(Additional reporting by Devika Krishna Kumar, Julia Payne and Shadia Nasralla in London; Shu Zhang and Sonali Paul
Editing by Gabriela Baczynska, David Goodman and David Gregorio)

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