Crude oil futures fall as Colonial Pipeline due to resume full operations soon

London — 1004 GMT: Oil futures prices fell in midmorning London trading May 13 on news that the key Colonial Pipeline in the US has restarted operations following a cyberattack on May 7.

At 11:04 am London time (1004 GMT), the ICE July Brent contract was down $1.74/b (2.5%) from the May 12 settle at $69.32/b while the NYMEX June light sweet crude contract was down $1.79/b cents/b (2.7%) at $66.10/b.

"Following this restart, it will take several days for the product delivery supply chain to return to normal," Colonial said in a statement. "Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period. Colonial will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal."

Colonial had halted all pipeline operations May 7 because of a ransomware attack. The halt restricted flows of gasoline and other refined products for much of the US South and East Coast, preventing the pipeline from delivering more than 100 million gallons/d of fuel and heating oil. The shutdown and subsequent market reaction raised gasoline prices above $3/gallon -- the highest level since 2014.

While Colonial's announcement was an "encouraging development," the pipeline will take several days to completely return, and "there is significant panic buying in the United States (even in locations not served by the pipeline) which exacerbates the impact of the shortfall," according to S&P Global Platts Analytics.

Gasoline inventories in the Northeast are expected to fall to five-year lows in the week started May 9 while those with US Gulf Coast refiners are expected to rise, as products begin to make their way through the pipeline, according to Platts Analytics.

Meanwhile, the Energy Information Administration reported a 427,000-barrel drop in US crude stockpiles in the week ended May 7, with total US exports falling to their lowest level since September 2018.