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Oil settles higher as key U.S. fuel pipeline plans restart

05/10/2021 | 05:28pm EDT
FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub in Cushing

NEW YORK (Reuters) -Oil prices settled higher on Monday after a major U.S. fuel pipeline said it could largely restart within the week after a cyberattack forced its shutdown.

Potential U.S. demand growth boosted crude prices, offsetting fears that a resurgent coronavirus pandemic in India would cut demand in Asia.

Colonial Pipeline, the largest fuel pipeline in the United States, said on Monday it expects to "substantially" restore operational service by the end of the week.

The system was shut by a cyberattack on Friday, and by Sunday some minor conduits had been reopened while the main lines remained shut.

Last week, traders' focus had shifted to supportive factors around the U.S. opening. "Now the market will be watching the pipeline story," said Phil Flynn, a senior analyst at Price Futures Group in Chicago.

Brent crude settled up 4 cents, or 0.1%, at $68.32 a barrel. U.S. West Texas Intermediate (WTI) crude settled up 2 cents, or 0.03% at $64.92. Both benchmarks rose more than 1% last week, their second consecutive weekly gain.

"If the pipelines were to remain out of action for any length of time, this would have far-reaching effects on the oil market not only in the U.S., but also in Europe," said Commerzbank analyst Carsten Fritsch.

"That said, it is currently assumed that the disruption to the pipelines will be resolved in a matter of days, so the impact should be limited."

The White House was working with Colonial to help it recover. Commerce Secretary Gina Raimondo said the pipeline fix was a top priority.

The U.S. government has not received any requests to waive the Jones Act in response to the pipeline shutdown, a spokesman for the U.S. Customs and Border Protection said on Monday.

A top White House national security official said the U.S. intelligence community is working to determine whether the hackers of the Colonial Pipeline have ties to the Russian government.

Anne Neuberger, deputy national security adviser for cyber, told reporters at a White House briefing that the FBI has been tracking the ransomware group DarkSide since at least last October. A news release issued in the name of DarkSide said its goal was to make money and not create problems for society.

Brent crude has risen more than 30% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, and easing coronavirus movement restrictions in the United States and Europe.

But the worsening pandemic in Asia has weighed. Indian coronavirus infections and deaths held close to record daily highs on Monday.

(Reporting by Jessica Resnick-Ault in New YorkAdditional reporting by Alex Lawler in London, Aaron Sheldrick in Tokyo and Florence Tan in SingaporeEditing by David Gregorio and Matthew Lewis)

By Jessica Resnick-Ault

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
LONDON BRENT OIL 0.11% 73.09 Delayed Quote.40.00%
S&P GSCI BRENT CRUDE INDEX 0.29% 617.1072 Delayed Quote.39.21%
S&P GSCI CRUDE OIL INDEX 0.35% 388.3589 Delayed Quote.45.51%
WTI 0.10% 71.105 Delayed Quote.45.60%
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