Colonial Pipeline dropped, and oil prices plummeted on Tuesday as a result of concerns about a sustained shutdown of the main fuel pipeline system in the United States. While several Gulf Coast refineries reduced capacity, the Colonial Pipeline, which transports over 2.5 million barrels of gasoline, diesel, and jet fuel every day, shut down on Friday due to a cyberattack. On Monday, the company announced that it was resuming operations in stages with the "intention of substantially restoring operating service by the end of the week." Meanwhile, the corporation has started manually running its 700,000-barrel-per-day capacity for a limited period, using current inventories.
However, the disruption has also caused the shutdown of some crude units. Motiva Enterprises LLC closed two of its three crude units in Texas, including the largest unit in the nation. Total SE followed suit, reducing gasoline production at its 225,500 BPD Port Arthur refinery on Monday due to the ongoing pipeline outage. Lachlan Shaw, National Australia Bank's head of commodity research, said: It's quite possible we'll see reduced crude oil demand. Some refineries in Texas have already scaled back runs because of the pipeline being out."
At the same time, quickly spreading coronavirus cases rose in India, dampening prospects for a global recovery and herd immunity. The World Health Organization has already designated this strain of coronavirus, discovered in India last year, as a global threat, with reports indicating that it spreads more quickly than previous strains of the virus.
Analysts predict that crude oil inventories in the United States will fall by around 2.3 million barrels in the first week of May, after an eight million-barrel decline the previous week. Following that, gasoline stocks are forecast to fall by about 400,000 barrels. OPEC's monthly oil price survey is also due to be released today. This OPEC report will include April output figures.