Oil prices down as worries about pipeline outage fade

London — Oil prices fell on Tuesday on fading fears of a prolonged outage of the largest US fuel pipeline system, while India’s coronavirus crisis showed scant sign of easing.

Brent crude futures dropped 30c, or 0.4%, to $68.02 a barrel by 10am GMT. US West Texas Intermediate (WTI) crude futures fell 32c, or 0.4%, to $64.60 a barrel.

Oil was retreating amid weak sentiment as Asian stocks suffered a tech-led sell-off and the market shrugged off concerns about a temporary shutdown of the Colonial Pipeline, DailyFX strategist Margaret Yang said.

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

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

The US petrol futures contract and US heating oil futures, which rose after the outage, have retreated to pre-Friday levels on the prospect of the restart.

Meanwhile, sentiment is weighed down by the rapid spread of coronavirus infections in India, which has increased calls to lock down the world’s second-most populous country and the third largest oil importer and consumer.

On the bullish side for crude, analysts are expecting data to show US inventories fell by about 2.3-million barrels in the week to May 7, after an 8-million barrel drop the previous week, according to a Reuters poll.

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

Oil cartel Opec is also expected to publish its monthly oil market report at 11.20am GMT.

Reuters