Oil tumbles Thursday as Colonial pipeline restarts

London (Quantum Commodity Intelligence) - Oil prices retreated Thursday, giving up more than Wednesday's sharp gains, as the Colonial pipeline slowly restarted in the US and the market focused on the lacklustre US weekly oil report, the IEA's downgrade of global oil demand growth, and the resurgence of Covid-19 in Asia.

Some of Wednesday's gains likely reflected investors looking for an alternative home amid a slump in Wall Street as inflation reared higher.

As Wall Street recovered slightly Thursday, oil slid back again.

July Brent shed $2.13/b by 16.30 UK time compared to yesterday, and was back to $67.53/b.

But the restarting of the Colonial pipeline had more impact on nearby European distillates, which fell the equivalent of $2.68/b.

Despite headlines of panic buying and shortages of gasoline in the US, cracks June Eurobob barge paper have retreated lower throughout the week, dropping from $11.12/b from last Friday to $10.28/b Thursday.

Consecutive builds in US gasoline stocks and poor implied US gasoline demand of 8.8 million b/d suggests the driving season will be stuck in the slow lane. 

Products

Naphtha cargo prices tumbled $22.25/mt ($2.47/b), outstripping crude, and undermining crack values to -$2.82/b versus Brent. Crack values in the 12-month ahead swaps curve also softened.

Gasoline was reflected in premium unleaded barges in ARA, dropping $20/mt ($2.40/b).

Jet barges in FARAG twice traded at flat to Cif cargo paper, and with cargoes offered at discounts to the forward curve, barges maintained a premium above cargoes.

June and July Low Sulfur Gasoil futures both lost $20/mt ($2.68/b), depressing middle distillate cracks. Diesel barges in ARA traded at $2/mt below June LSG.

Fuel oil has been more effected by the Covid-19 pandemic crisis than most products, and high sulfur fuel oil cracks softened again Thursday to extend a trend