Oil falls as pipeline outage weighs on U.S. Gulf Coast refinery runs

By Sonali Paul
MELBOURNE, May 11 (Reuters) - Oil prices fell on Tuesday as
the prospect of the main U.S. East Coast gasoline pipeline
remaining shut for the rest of this week led some U.S. Gulf
Coast refiners to cut output, denting their appetite for crude.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell
40 cents, or 0.6%, to $64.52 a barrel at 0247 GMT, after gaining
2 cents on Monday.
Brent crude LCOc1 futures dropped 45 cents, or 0.7%, to
$67.87 a barrel, after climbing 4 cents on Monday.
Colonial Pipeline, which transports more than 2.5 million
barrels per day (bpd) of gasoline, diesel and jet fuel, shut
down its network on Friday after being hit by a cyberattack.

"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," said Lachlan Shaw, National
Australia Bank's head of commodity research.
"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."
Colonial said on Monday it aims to resume full operations by
the end of this week. The outage, however, has already led
Motiva Enterprises LLC to shut two of three crude units at its
607,000 bpd Port Arthur refinery in Texas, the largest in the
United States.
Total SE TOTF.PA also cut gasoline output on Monday at its
225,500 bpd Port Arthur refinery due to the pipeline outage.

The benchmark U.S. gasoline futures contract RBc1 , which
spiked after the outage, has now retreated to pre-Friday levels
on the prospect of the restart. On Tuesday, the contract was
down 0.6% at $2.1212 a gallon.
On the positive side for crude, analysts are expecting data
to show U.S. crude inventories fell by about 2.3 million barrels
in the week to May 7, following an 8 million-barrel drop the
previous week, according to a Reuters poll. Gasoline stocks are expected to have fallen by about 400,000
barrels, six analysts estimated on average ahead of reports from
the American Petroleum Institute industry group on Tuesday and
the U.S. Energy Information Administration on Wednesday.