Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Oil Loses Over 3% Amid U.S. Fuel Pipeline Reopen, India Covid

CommoditiesMay 13, 2021 03:52PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

(updates throughout with settlement prices, India Covid situation)

By Barani Krishnan

Investing.com - Oil prices tumbled more than 3% Thursday for their worst loss in a month after a key pipeline for U.S. fuel reopened from a cyberattack, erasing  gains from earlier in the week helped by a squeeze in gasoline supplies.

India’s festering Covid situation, which was infecting more than 350,000 people a day and killing over 4,000, added to the downward pressure on oil which counts on the country as its third largest consumer.

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down $2.26, or 3.4%, at $63.82 per barrel. It was WTI’s sharpest one-day decline since April 5, when it lost 4.5%. 

London-traded Brent, the global benchmark for crude, finished the session down $2.27, or 3.3%, at $67.05. Brent’s previous sharpest loss was also on April 5, when it fell 4.2%.  

The price drop was largely triggered by the reopening of the Colonial Pipeline that was shut for six days to contain a cyberattack on the largest fuel delivery system in the U.S. East Coast. 

The outage had led to a temporary gasoline squeeze in the No. 1 economic region of America, sending gasoline futures up 2% at one point this week and pump prices to seven-year highs of $3 a gallon. On Thursday, gasoline futures settled down 3% to just under $2.10 per gallon on news that the Colonial Pipeline was back in operation after its operator reportedly paid a $5 million ransom to the hackers of its system. President Joe Biden declined comment when asked about this.

The setback in both oil and crude prices raised questions about the seasonal upward momentum for energy markets ahead of the Memorial Day weekend in the United States. 

The occasion, which falls on May 31 this year, has traditionally served as the starting gun for the summer race in oil prices, as demand peaks from Americans who set out for long road trips. But the outbreak of the coronavirus pandemic last year upended this, with only 23 million people traveling by road for Memorial Day 2020, the lowest on record since the American Automobile Association began recording the data in 2000. The AAA expects 37 million travelers this time, up 60% from last year.

Demand for oil has improved remarkably from a year ago, with the 50 U.S. states having reopened most or all of their economies from Covid-lockdowns and restrictions. The U.S. Center for Disease Control and Prevention, universally known by its acronym CDC, on Thursday waived the need for masking or social restrictions for Americans fully vaccinated from the virus — a major step toward economic rehabilitation. 

Global stockpiles of oil are also back to five-year inventory norms from a seemingly unmanageable glut just a year ago that drove WTI to its first-ever negative pricing of minus $40 per barrel.

Yet, with U.S. crude exports falling spectacularly by more than half last week to 1.8 million barrels per day from a previous record high of 4.1 million daily, some traders remained unsure about global demand for oil. This was especially so with major consumers like India and Brazil experiencing new Covid catastrophes.

India reported 362,727 coronavirus cases on Thursday, bringing its total infections to 23,703,665, according to figures released by the health ministry. It also reported 4,120 fatalities, with the total death toll now at 258,317.

Two Indian states and the union territory of Delhi have suspended Covid-19 vaccinations for people aged 18 to 44 due to shortages. 

In Delhi, which encompasses the Indian capital of New Delhi, Deputy Chief Minister Manish Sisodia on Wednesday tweeted: “We are forced to shut down 100 Covaxin vaccination sites in 17 schools due to no supply.” He blamed the shortages on “vaccine mismanagement” by the central government, adding that India’s decision to export vaccines was its “biggest mistake.”

“I don’t think we are completely there yet with oil demand,” said John Kilduff, founding partner at New York-based energy hedge fund Again Capital. “The India situation is going to take much longer to resolve and the supply-demand balance in the U.S. is still spotty running up to Memorial Day.”

Oil Loses Over 3% Amid U.S. Fuel Pipeline Reopen, India Covid
 

Related Articles

Australia takes wine dispute with China to WTO
Australia takes wine dispute with China to WTO By Reuters - Jun 18, 2021 23

By Lidia Kelly MELBOURNE (Reuters) -The Australian government said on Saturday it was lodging a formal complaint with the World Trade Organization over China's imposition of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (9)
Vlad Lozovskiy
Vlad Lozovskiy May 13, 2021 1:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oh please!!! Reuters love using big bold words. "Tumble" looks very different than 3% dip.
Barani Krishnan
Barani Krishnan May 13, 2021 1:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It's the sharpest drop in a month. Go learn some synonyms.
Alan Rice
Alan Rice May 13, 2021 1:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
World oil glut continues. Earth is dying. Tic-toc.
Shane Weddle
Shane Weddle May 13, 2021 1:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What a crock. Trying to comvicne people that opening the pipeline is the cause of this dip. Don’t *** down my back and tell me its raining!!
Show previous replies (1)
Gerry Baurich
Gerry Baurich May 13, 2021 1:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan  your article is full of ... Why should reopening cause the dip?
Shane Weddle
Shane Weddle May 13, 2021 1:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan im sorry your ego is hurt, but peoppe being able to buy the finished goods that come from crude again isn’t a very logical reason for the dip. Im sorry you cant seperate what tou do from who you are as a person, but maybe the thinned skinned writer in you can tell yourself that.
Barani Krishnan
Barani Krishnan May 13, 2021 1:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Shane Weddle  My ego is hurt? I'm thin-skinned? LOL. Maybe you don't understand sarcasm. Well, let me educate you about the something: Oil held up the past couple days (despite a weak EIA report for crude) from the gasoline rally triggered by Colonial. That was a squeeze on products - not really a good reason for crude to rally, if you ask me. But then again, there was so much hype over the pipeline and all that price intensity was spilling into crude. So we accepted it without much argument. With the reopening of the pipeline, RBOB gave back 3% today and crude accordingly matched that decline. The story above makes that clear. In fact, I just went over what Reuters reported and they cite the same reason. Last but not least: I never take offense with people who can't understand simple logic that they call "crock":)
Shane Weddle
Shane Weddle May 13, 2021 1:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan look buddy. You are right the oil rally didnt make sense if the reason was in fact the pipeline and not a myraid of factors thst no one can effectivly track. Its all noise and most of these news articles routinly snatch the biggest headline and insert that as a reason regarless if it makes sense or not. Nate Silver actually has an entire chapter dedicated to this phenomon in his book the signal and the noise. Im sorry that i called your artice a crock. It is no more or no less a crock than any of the other such articles. I however will not appoligize for saying you have an ego problem as you cant help but get the last word and attempt to belittle and talk down to someone who refuted your thesis. I critiqued your article not you as a person.
Barani Krishnan
Barani Krishnan May 13, 2021 1:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Shane Weddle  And you don't have an ego problem in wanting to have the last word as well? Amusing indeed. I have a healthy exchange with so many who disagree with me and those are always anchored by one thing: mutual respect. Courtesy is a two-way street to me. I believe in replying in the same tenor directed at me. I agree that there is so much of BS reporting out there on the markets: On Monday, we heard tech sold off on the April jobs numbers which will discourage tapering; today, we hear tech rebounded on the weekly jobless stats that showed employment improving. Really? That said, today's correction in crude was driven by gasoline and the correction in gasoline was driven by the Colonial Pipeline reopening. There's nothing crock about that. I'm sorry if that messed up your position, mate, but it's the truth.
Brandon Bell
Brandon Bell May 13, 2021 12:55PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes, I am sure that a single US pipelines that was expected to re-open is responsible for a 3% drop in oil price and not anything else going on in the market...
Spencer Pimer
Spencer Pimer May 13, 2021 12:55PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
a single pipeline that supplies 45% of the east coast needs. The most populated american coastline of the number 1 largest consumer of oil in the world.
Spencer Pimer
Spencer Pimer May 13, 2021 12:55PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Whether it happened naturally, or was curated by the U.S government to tighten up their cyber laws, is another story
Barani Krishnan
Barani Krishnan May 13, 2021 12:55PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks for the rare wisdom here, Spencer 🙏🏽
Rose Yane
Rose Yane May 13, 2021 12:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Is good to buy now???
KyK Research
KyK Research May 13, 2021 12:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is silly. A longwr shutdown would have hurt oil bc of the perceived excess build up. The drop is just thr usual noise.
Mansour Fahad
Mansour Fahad May 13, 2021 12:31PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
$53 is coming in the upcoming months.
Asmail Asmail
Asmail Asmail May 13, 2021 12:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bertuğ Eskiturk
Bertuğ Eskiturk May 13, 2021 12:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
they paid the 5 mil ransom to hackers
Giuseppe Conidi
Giuseppe Conidi May 13, 2021 12:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ransonware is the worst, buy i also don’t claim to undetstand every type of wev based attacks. Are there options OTHER than paying the demand, esp if they can’t track the perpetrators, and the fact that the issue needed to be solved ASAP. If you have add’n insight into my question I’d love to get your thoughts. Enjoy your day!
Jeff Chevalier
Jeff Chevalier May 13, 2021 12:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Because it's a ******of a lot easier to track the money than the software. All someone has to do is try and get the money and they're screwed.
Bertuğ Eskiturk
Bertuğ Eskiturk May 13, 2021 12:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Giuseppe Conidi I read somewhere only 17% of people who pay ransom get their data back after the payment, also the decryption tool given by the hackers in exchange of money was so slow Colonial used their own back up data to countinue operations instead of decrypting the stolen data.
Bertuğ Eskiturk
Bertuğ Eskiturk May 13, 2021 12:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jeff Chevalier They got the payment in Cryptocurrency and there are bitcoin mixers on the tor network which makes it almost impossible to trace the money back, but still, its not impossible.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email