Oil gains after cyberattack shuts down US fuel pipelines

Colonial Pipeline’s main fuel lines remained offline after attack that shut the system

LONDON:

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 US are hiding a worrying Covid-19 trend in Asia,” said Louise Dickson, analyst at Rystad Energy.

Brent crude was up by $0.69, or 1%, at $68.97 a barrel by 1137 GMT. US West Texas Intermediate (WTI) crude rose by $0.61, 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 US, 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.

Brent crude has risen over 30% this year due to supply cuts by the Organisation 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.

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.