Oil Slides despite Positive Projection by U.S Energy Agency
Oil prices slide on Thursday despite positive projection by the International Energy Agency, IEA, following a stubborn cyber-attack on the United States largest pipeline which carries 2.5 million barrels a day of diesel, gasoline, and jet fuel.
The price of international benchmark Brent crude settled at $68.50 per barrel, having dropped by 1.18% from $68.32 a barrel.
American benchmark West Texas Intermediate (WTI) was at $64.43 per barrel at the same time, dropped by 0.74% after it ended the previous session at $69.32 a barrel.
There was a sporadic cyber-attack, ransomware that hit the US’s largest pipeline which carries 2.5 million barrels a day of diesel, gasoline, and jet fuel.
After ransomware hackers broke into some of its networks on last Friday, demand was curtailed due to disrupted refinery production in the region.
It was noted that the production decrease in some refineries that are fed from the Georgia-headquartered pipeline also forced supplier firms in the area to reduce output.
Meanwhile, French oil giant Total announced a 225,500-barrel reduction in gasoline production at the Port Arthur refinery due to the pipeline outage.
Similarly, the largest oil refinery in the US, Motiva in Port Arthur, Texas, which processes over 600,000 barrels of oil per day, halted operations due to the attack.
However, Colonial Pipeline, operator of the largest U.S. fuel pipeline, said Wednesday it is restarting operations after being shut down for five days due to a cyber-attack.
According to the oil traders, the shutdown led to widespread gasoline shortages and caused temporary price spikes amidst panic buying.
IEA re-affirms the Global oil demand will rise 6% in 2021
Despite multiple downside to projection, the United States International Energy Agency re-affirms in a report that global oil demand will increase 6% this year.
The agency based its expectations on vaccination campaigns which continue to expand as the pandemic comes under control.
Having contracted by 8.7 million barrels per day (bpd) in 2020, global oil demand is estimated to rise by 5.4 million bpd to an average of 96.4 million bpd, the IEA said in its monthly oil report.
The agency warned that the recovery in global oil demand remains fragile as surging Covid cases in countries such as India and Thailand offset recent more positive trends in Europe and the US.
Pointing that the consumption is still lower than at the end of 2020, the EIA said the decline also reflects to a large extent seasonal patterns and the Covid outbreaks registered in Brazil, India and Europe, as well as February’s freezing weather in the US contributed to a slower recovery in global demand.
In 2021, the highest consumption is forecast to be in the Asia Pacific region with 35.8 million barrels per day, followed by the Americas with 30.2 million barrels and Europe with 13.8 million barrels.
Global supply rises
The IEA said global oil supply increased by 330.000 bpd in April to 93.37 million bpd as higher flows from the US, Russia and Brazil combined with a substantial increase in biofuels more than offset hefty maintenance outages in Canada.
The number is still 6.7 million bpd below April 2020 when many OPEC+ producers pumped at or near record highs. During May, Saudi Arabia is expected to lead a far bigger boost in world oil output as the OPEC+ alliance further eases output cuts.
OPEC crude oil production reached 25.04 million bpd in April, recording an increase of 70,000 bpd compared to the previous month. Non-OPEC production also saw an increase of almost 370.000 bpd to 63.14 million bpd.
Oil Slides despite Positive Projection by U.S Energy Agency
