Oil Down, Refiners Cut Output as Colonial Pipeline Extends Network Closure

Oil was down Tuesday morning in Asia, with the extended closure of Colonial Pipeline’s key U.S.

East Coast gasoline pipeline curbing appetite for the black liquid.

Brent oil futures fell 0.92% to $67.69 by 13:19 PM ET (5:19 AM GMT) and WTI futures were down 0.89% to $64.34.

A cyberattack during the previous week forced Colonial Pipeline to shut its network.

“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,” National Australia Bank (OTC:NABZY) head of commodity research Lachlan Shaw told Reuters.

“That will weigh on crude oil prices pretty obviously, even though parts of the pipeline are restarting, and Colonial is expecting the pipeline to be back to capacity by the weekend,” he added.

Although Colonial Pipeline said on Monday that it aims to resume full operations by the end of the week, some producers have already reduced their output.

Motiva Enterprises LLC shut two of three crude units at its 607,000 bpd Port Arthur refinery, the U.S.’ largest. Total SE on its part cut its gasoline output on Monday at its own 225,500 bpd Port Arthur refinery.

The benchmark U.S. gasoline futures contract, which spiked after the shutdown, retreated to pre-outage levels over hopes that Colonial Pipeline can restart its network on target. The contract was down 0.6% at $2.1212 a gallon on Tuesday.

Investors now await U.S. crude oil supply data from the American Petroleum Institute, due later in the day.