By Adedapo Adesanya
Crude oil prices slipped into the bearish territory on Monday after the initial concerns raised about supply disruptions were eased.
Colonial Pipeline in the US, which came under a cyberattack had shut down its pipelines and this pushed prices higher but after it announced that some smaller lines between terminals and delivery points were operational, the gains evaporated.
Consequently, the price of the Brent crude futures dropped 18 cents or 0.26 per cent to sell at $68.14 per barrel, while the West Texas Intermediate (WTI) crude futures lost 15 cents or 0.25 per cent to trade at $64.76 per barrel.
Last Friday, Colonial Pipeline halted all pipeline operations as a proactive measure following the ransomware cyberattack. A criminal group known as DarkSide was responsible for the attack, the country’s Federal Bureau of Investigation (FBI) confirmed.
The market had taken the positive route because if the pipelines were to remain out of action for any length of time, this would have disruptive effects on the oil market not only in the US but also in Europe.
News that the US Government was working with Colonial Pipeline to help it to recover also arrested the price direction as news of disruptions, especially to supply, are a magnet for higher oil prices.
However, the market continues to look at the coronavirus pandemic situation in India, the world’s third largest oil consumer as cases continue to spread. Now, it is dealing with increasing pressure to impose a nationwide lockdown.
On Monday, India reported 366,161 new cases, its health ministry said, the first time daily infections have dipped below 400,000 since May 6. Its total case is now more than 22 million since the pandemic began.
The health ministry also reported an additional 3,754 virus-related deaths on Monday, after two consecutive days of reporting more than 4,000 fatalities. The country has now recorded 246,116 total COVID-19 deaths.
Despite this, there still remains a level of optimism as easing coronavirus movement restrictions in the United States and Europe will help lift the mood of the market.
In both parts of the world, strong vaccination efforts keep showing signs that demand is on its pathway to recovery.
In the US, more states have begun to relax movement restrictions as the rates of vaccinated people continue to rise while the European Union is set to start allowing foreign tourists into the bloc beginning from June.
Modupe Gbadeyanka