Oil Price Fundamental Daily Forecast – Rangebound on Uncertainty Over Potential Impact of Pipeline Shutdown

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging high but well off their highs shortly after the regular session opening on Monday. The early trade is a little cautious after a cyberattack forced the shutdown of major fuel pipelines in the United States and raised concerns about supply disruption.

The news is clearly having an effect on gasoline and distillates, but the price action in crude oil indicates there is some uncertainty as to how the incident will impact prices.

At 13:13 GMT, June WTI crude oil is trading $65.27, up $0.37 or +0.57% and July Brent crude oil is at $68.77, up $0.49 or +0.72%.

The cyberattack news is offsetting demand concerns due to rising coronavirus cases in Asia.

Colonial Pipeline Hack

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 White House was working closely with top U.S. fuel pipeline operator Colonial Pipeline on Sunday to help it recover from a ransomware attack that forced the company to shut a critical fuel network supplying populous eastern states.

Commerce Secretary Gina Raimondo said the pipeline fix was a top priority for the Biden administration and Washington was working to avoid more severe fuel supply disruptions by helping Colonial restart as quickly as possible its more than 5,500-mile (8,850 km) pipeline network from Texas to New Jersey.

Colonial transports roughly 2.5 million barrels per day of gasoline and other fuels from refiners on the Gulf Coast to consumers in the mid-Atlantic and southeastern United States.

U.S. gasoline futures jumped more than 3% to $2.217 a gallon, the highest since May 2018, as trading opened for the week and market participants reacted to the closure.

Traders Book Tankers in Europe to Ship Gasoline Across Atlantic after Colonial Shutdown

Traders provisionally booked at least six tankers to ship gasoline from Europe to U.S. destinations following a cyber-attack that shut the United States’ top fuel pipeline network, Refinitiv Eikon data showed on Monday.

Two European gasoline traders said the market was taking a cautious approach to see how long the shutdown would last.

Marathon Working on Other Logistics to Supply Customers if Colonial Outage Extended

Marathon Petroleum can meet its supply commitments for now but is working to find alternative ways to ship motor fuels to the eastern United States if the Colonial Pipeline shutdown is extended, a company spokesman said on Monday.

Daily Forecast

“Should the…network remain down for more than a few days, the nation’s East Coast and Southeastern markets will start to see supply hiccups and related price spikes, while Gulf Coast refining centers will scramble to place cargoes alternatively,” oil analytics firm Vortexa said in a note.

Retail fuel experts including the American Automobile Association said an outage lasting several days could have significant impacts on regional fuel supplies, particularly in the southeastern United States.

Neither the government nor Colonial Pipeline gave an estimate for a full restart date.