Oil falls as pipeline outage weighs on U.S. Gulf Coast refinery runs

  • Reuters
  • Commodities News
Oil falls as pipeline outage weighs on U.S. Gulf Coast refinery runs
Credit: © Reuters.

By Sonali Paul

MELBOURNE, May 11 (Reuters) - Oil prices fell on Tuesday as the prospect of the main U.S. East Coast gasoline pipeline remaining shut for the rest of this week led some U.S. Gulf Coast refiners to cut output, denting their appetite for crude.

U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 40 cents, or 0.6%, to $64.52 a barrel at 0247 GMT, after gaining 2 cents on Monday.

Brent crude LCOc1 futures dropped 45 cents, or 0.7%, to $67.87 a barrel, after climbing 4 cents on Monday.

Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, shut down its network on Friday after being hit by a cyberattack. quite possible we'll see reduced crude oil demand. Some refineries in Texas have already scaled back runs because of the pipeline being out," said Lachlan Shaw, National Australia Bank's head of commodity research.

"That will weigh on crude oil prices pretty obviously, even though parts of the pipeline are restarting and Colonial is expecting the pipeline to be back to capacity by the weekend."

Colonial said on Monday it aims to resume full operations by the end of this week. The outage, however, has already led Motiva Enterprises LLC to shut two of three crude units at its 607,000 bpd Port Arthur refinery in Texas, the largest in the United States. SE TOTF.PA also cut gasoline output on Monday at its 225,500 bpd Port Arthur refinery due to the pipeline outage. benchmark U.S. gasoline futures contract RBc1 , which spiked after the outage, has now retreated to pre-Friday levels on the prospect of the restart. On Tuesday, the contract was down 0.6% at $2.1212 a gallon. the positive side for crude, analysts are expecting data to show U.S. crude inventories fell by about 2.3 million barrels in the week to May 7, following an 8 million-barrel drop the previous week, according to a Reuters poll. stocks are expected to have fallen by about 400,000 barrels, six analysts estimated on average ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.

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