The Colonial Pipeline reopened after being shut down for days

Recap: Oil futures rose on Friday, posting weekly gains, as the Colonial Pipeline reopened after being shut down for days in response to a ransomware attack. It is estimated that the outage resulted in a 7.5 million barrel shortfall in East Coast gasoline and a 6 million barrel shortfall for distillate, totaling 13.5 million barrels. Since the outage took place during a weekly EIA reporting period, next week’s inventory numbers will provide a clearer picture of the damage done to stockpiles. June WTI settled at $65.37 a barrel, up $1.55, or 2.4%, for a weekly gain of 0.7%. Brent for July delivery added $1.66, or 2.5%, to close the week at $68.71 a barrel, up 0.6%. June RBOB rose 1.5%, to $2.13 a gallon, down less than half a cent on the week. June heating oil added 1.8%, to settle at $2.04 a gallon, up 1.3% on the week.

Technical Analysis: After pulling back toward the bottom of the ascending channel, WTI rebounded as bottom pickers were lurking down below. Over the course of the past two months, this channel has played out quite nicely for those looking for in and out profits, while the 10-day moving average acted as a pivotal area and now sits just above $65. With Friday’s settlement above $65, we would look for technical traders to try and take this market back up toward the top of the channel. Above $65, resistance is set at $65.75 and $66.75. Support remains at $62.27 and below that at $61.

Fundamental NewsColonial Pipeline increased its deliveries to markets on the East Coast on Friday following a nearly week-long outage caused by hackers.  A spokeswoman for the American Automobile Association said "relief is coming".  Colonial Pipeline announced late Thursday it had restarted its entire pipeline system linking refineries on the Gulf Coast to markets along the eastern seaboard.  President Joe Biden also reassured U.S. motorists that fuel supplies should start returning to normal by this weekend, even as more than half the filling stations in several states remained shut following a flurry of hoarding by panicky drivers.

The Department of Homeland Security has approved another temporary targeted Jones Act waiver for a second company as part of an ongoing effort to ease tight fuel supplies along the eastern United States.  Citgo received the second Jones Act waiver granted by the U.S. government.  The effort is part of the Biden administration's steps to increase fuel supplies following the Colonial Pipeline shut down that led to gasoline shortages in some parts of the U.S. East Coast.  Meanwhile, White House Press Secretary, Jen Psaki, said the vast majority of energy markets in parts of the eastern United States affected by the Colonial Pipeline outage will receive fuel through the weekend and into next week. 

The U.S. capital was running out of gasoline on Friday even as the top U.S. fuel pipeline ramped up deliveries.  Tracking firm GasBuddy said gas station outages in Washington, D.C., increased to 87%, from 79% the day before.  Some states experienced modest improvements in gas outages but still saw a high amount. About 70% of gas stations in North Carolina were without fuel, while around 50% of stations in Virginia, South Carolina and Georgia had outages.

IIR Energy reported that U.S. oil refiners are expected to shut in 924,000 bpd of capacity in the week ending May 14th, cutting available refining capacity by 149,000 bpd from the previous week.  Offline capacity is expected to fall to 614,000 bpd in the week ending May 21st and to 538,000 bpd the week after.

Early Market Call – as of 8:30 AM EDT

WTI – June $64.89, down 49 cents

RBOB – June $2.1172, down 94 points

HO – June $2.0317, down 45 points

View the Sprague Refined Products Market Watch Report in a downloadable pdf format by clicking below.

Click to view more online:
Heating Oil Supplier

Diesel Supplier
View market updates
View our refined products glossary
Go to SpraguePORT online

This market update is provided for information purposes only and is not intended as advice on any transaction nor is it a solicitation to buy or sell commodities. Sprague makes no representations or warranties with respect to the contents of such news, including, without limitation, its accuracy and completeness, and Sprague shall not be responsible for the consequence of reliance upon any opinions, statements, projections and analyses presented herein or for any omission or error in fact. The views expressed in this material are through the period as of the date of this report and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance or results and actual results or developments may differ materially from those projected. The whole or any part of this work may not be reproduced, copied, or transmitted or any of its contents disclosed to third parties without Sprague’s express written consent.