SULAIMANI (ESTA) — Oil prices dropped on Tuesday as fears of prolonged outage of the largest U.S. fuel pipeline system, Colonial Pipeline, faded.
Brent crude futures dropped 46 cents to $67.86 a barrel at 0657 GMT. U.S. West Texas Intermediate (WTI) crude futures fell 44 cents to $64.48 per barrel.
“The rally in oil prices was short-lived as the Colonial Pipeline disruption seems it will not have a prolonged impact,” Reuters quoted Edward Moya, senior market analyst at OANDA, as saying.
The U.S. gasoline futures contract and U.S. heating oil futures, which spiked after the outage, have retreated to pre-Friday levels on the prospect of the restart.
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.
The privately owned company said on Monday it was working on restarting in phases with “the goal of substantially restoring operational service by the end of the week”, according to Reuters.
It has begun manually operating its 700,000-barrel-per-day multi-product fuel line between Greensboro, North Carolina, and Maryland for a limited time using existing inventories.
The outage, however, has already led Motiva Enterprises LLC to shut two of three crude units at its 607,000 bpd Port Arthur refinery Texas, the largest in the United States.
Reuters reported that Total SE also cut gasoline on Monday at its 225,500 bpd Port Arthur refinery due to the pipeline outage.
“It’s quite possible we’ll see reduced crude oil demand. Some refineries in Texas have already scaled back runs because of the pipeline being out,” Lachlan Shaw, National Australia Bank’s head of commodity research, told Reuters.
