Oil prices fell on Tuesday on fading fears of a prolonged outage at the largest US fuel pipeline system while India’s coronavirus crisis and a tech-led sell-off in global stock markets also weighed.
Brent crude futures dropped $0.83, or 1.21%, to $67.49 a barrel by 1232 GMT. US West Texas Intermediate (WTI) crude futures fell $0.84, or 1.29%, to $64.08.
Global stock markets suffered a second day of sharp losses on Tuesday as a combination of inflation worries, lofty valuations and an anti-monopoly drive in China sent the world’s mightiest tech giants tumbling.
Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, on Monday said that it was 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 gasoline futures contract and US heating oil futures, which rose after the outage, retreated to pre-Friday levels on the prospect of the restart.
“I believe the pressure we are currently seeing will be temporary,” said Tamas Varga of PVM Oil Associates.
“OPEC has just upped its projection for its oil ... implying healthy demand growth in the second half of the year because mobility restrictions are being lifted all over the world and hopefully India ... and because fears of slight inflation should make commodities, including oil, a perfect tool to hedge.”
Organisation of the Petroleum Exporting Countries (OPEC) on Tuesday raised its forecast for demand for its crude by 200,000 bpd and stuck to its prediction of a strong recovery in global oil demand this year as growth in China and the United States counters the coronavirus crisis in India.
Meanwhile, the rapid spread of infections in India has increased calls to lock down the world’s second-most populous country and the third-largest oil importer and consumer.
India’s top state oil refiners have already started reducing runs and crude imports as the new coronavirus cuts fuel consumption, company officials told Reuters on Tuesday.
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 a drop of 8 million barrels the previous week, a Reuters’ poll showed.
Gasoline stocks are expected to have fallen by about 400,000 barrels, analysts estimated ahead of reports from the American Petroleum Institute on Tuesday and the US Energy Information Administration on Wednesday.
OPEC is also expected to publish its monthly oil market report at 1120 GMT.