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Middle East

Oil gains after cyberattack forces shutdown of U.S. fuel pipelines

3 minute read

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson

  • U.S. government working to aid Colonial after cyberattack
  • Colonial says main fuel lines shut, some smaller lines restart
  • Map of Colonial Pipeline system: https://tmsnrt.rs/33upZXs

TOKYO, May 10 (Reuters) - Oil rose on Monday after a cyberattack forced the shutdown of major fuel pipelines in the United States and raised concerns about supply disruption, outweighing rising coronavirus cases in Asia.

Colonial Pipeline said on Sunday its main fuel lines remained offline after the attack that shut the system on Friday, but some smaller lines between terminals and delivery points were now operational.

"The bullish developments in the U.S. are hiding a worrying COVID-19 trend in Asia," said Louise Dickson, analyst at Rystad Energy.

Brent crude was up by 69 cents, or 1%, at $68.97 a barrel by 1137 GMT. U.S. West Texas Intermediate (WTI) crude CLc1> rose by 61 cents, or 0.9%, to $65.51. 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 closely with Colonial to help it to recover. Commerce Secretary Gina Raimondo said the pipeline fix was a top priority for the Biden administration. read more

Brent crude has risen over 30% this year due to 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 developments in Asia have weighed. Indian coronavirus infections and deaths held close to record daily highs on Monday. read more

While some analysts have said oil demand may never reach pre-pandemic levels, Goldman Sachs said it expected this by the end of the year and predicted Brent would hit $80 and WTI $77 within six months.

Reporting by Aaron Sheldrick in Tokyo and Simon Webb in New York; Editing by Kenneth Maxwell

Our Standards: The Thomson Reuters Trust Principles.

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