UPDATE 7-Oil drops 3% on India's COVID-19 crisis, U.S. pipeline restart

* Crude prices pull back from eight-week high
* Coronavirus sweeps through India's countryside
* Biden: U.S. fuel shortages to end in days as pipeline
reopens

(Updates prices to settlement, adds comment and details on
Colonial Pipeline)
By Devika Krishna Kumar
NEW YORK, May 13 (Reuters) - Oil prices fell about 3% on
Thursday as India's coronavirus crisis deepened and a key U.S.
fuel pipeline resumed operations, halting a rally that had
lifted crude to an eight-week high after forecasts for a rebound
in global demand later in the year.
Brent crude LCOc1 ended the session down $2.27, or 3.3%,
at $67.05 a barrel, after rising 1% on Wednesday. West Texas
Intermediate (WTI) CLc1 settled $2.26, or 3.4%, lower at
$63.82 a barrel, having risen 1.2% in the previous session.
Both benchmarks marked their biggest daily drops in
percentage terms since early April.
Prices also came under pressure as a broader surge in
commodity prices, labor shortage and much stronger-than-expected
consumer prices data this week have stoked inflation concerns
that could force the U.S. Federal Reserve to raise interest
rates.
Raising rates typically boosts the U.S. dollar, which in
turn pressures oil prices because it makes crude more expensive
for holders of other currencies. USD/
"Crude prices have steadily declined as investors hit the
pause button with super commodity cycle trade," said Edward
Moya, senior market analyst at OANDA.
"Inflationary fears have unnerved some investors into taking
some profit off the table with their energy trades."
U.S. President Joe Biden said motorists can expect filling
stations to begin returning to normal this weekend even as
shortages gripped some areas amid restart of the country's top
fuel pipeline network after it was shut by a ransomware attack.
The nearly-week long shutdown of the Colonial Pipeline,
which carries 100 million gallons per day of fuel, caused
gasoline shortages and emergency declarations from Virginia to
Florida, led two refineries to curb production, and spurred
airlines to reshuffle refueling operations.
In another bearish signal for oil demand, a variant of the
coronavirus has swept through India, the world's third-biggest
importer of crude. Medical professionals have not been able to say when new
infections will plateau and other countries are alarmed over the
transmissibility of the variant that is now spreading worldwide.
"Concerns are growing that the untamed spread of the
coronavirus in India and in Southeast Asia will dent oil
demand," PVM analysts said in a note.
"Its impact, however, is expected to be relatively brief and
the second half of the year will see the healthy revival of oil
demand growth."