Americas News
Oil Edges Up On Cyber Attack Worries, Decline In India Process Runs
The latest emerging fear of crude traders, that the recent cyber attack at the largest U.S. fuel pipeline system would result in gas shortages, caused crude prices to settle higher on Tuesday.
Although all indications are that operations at the Colonial Pipeline would be largely restored by the end of the week, Louise Dickson, oil markets analyst at Rystad Energy, echoed the sentiment of fellow experts by stating, "While the short-term risk is being played down, the market is still visibly shaken by the event, given the nature of the attack and the scale of the infrastructure."
She added, "The market is now concerned about the likelihood of such an event being repeated and about the severity of future attacks."
John Kilduff, founding partner of Again Capital, worried that "This turns into a crisis by the end of the week, if it's not resolved, particularly with Memorial Day coming; people are going to start topping off their tanks."
The attack did not detract from the growing expectations of a strong demand recovery later this year, however, and the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday raised its forecast for demand for its crude by 200,000 barrels per day (bpd), based on growth in China and the U.S.
Indeed, AAA Travel predicted a 60 percent year-over-year jump in the number of Americans travelling by rail, car, and air for the upcoming Memorial weekend, even though gas prices are approaching levels not seen in seven years.
With these elements in play, Brent on Tuesday rose 23 cents to settle at $68.55 per barrel, while West Texas Intermediate rose 36 cents to settle at $65.28.
Meanwhile, rising Covid rates in India have prompted a reduction in process runs and crude imports: Indian Oil Corp, the country's biggest refiner, has reduced runs to an average of between 85 percent and 88 percent of processing capacity, according to a company official.
However, he added that "We do not anticipate that our crude processing would be reduced to last year's level of 65-70 percent, as inter-state vehicle movement is still there ... [the] economy is functioning."
