Oil infrastructure at a Colonial Pipeline tank farm in Pelham, Ala.
Luke Sharrett/BloombergA key piece of infrastructure for the U.S. oil market was shut down starting on Friday and remains closed, with the potential for effects that could ripple through energy markets.
Colonial Pipeline, a privately held Georgia-based company, shut down its main pipeline taking oil products from the Gulf Coast to the Northeast after a ransomware attack. The pipeline transports about 45% of the fuel used in the Northeast.
Shortages of gasoline and other products have yet to emerge, but the shutdown could become a major factor in oil markets if it persists for several days. Fuel markets were mixed in early trading. Prices for gasoline and heating oil rose early on Monday, and then traded about flat.
The key question is how long the pipeline will be shut down. If it is off line for a few days, the market for refined products likely won’t be affected much because existing inventories can supply current demand. But a lag of a week or more would likely lead to shortages that would send the price of fuel higher.
Colonial said on Monday that it has a “goal of substantially restoring operational service by the end of the week.”
Meanwhile, “the US pipeline outage is set to offer a helping hand in relieving the country’s inventories further, a bullish gift that will stay with traders for some time,” wrote Rystad Energy analyst Louise Dickson.
“The pipeline closure could also mean that US crude exports, which surged to 4.1 million bpd last week, are kept onshore and fed into domestic refineries to replenish inventories”, she wrote. “Storage in the northeast and southeast regions of the US are poised to be heavily tapped in the coming days as the pipeline remains offline.”
One company that appears to be benefiting is New Jersey-based PBF Energy (PBF), which has substantial operations serving the Northeast. Its stock was up 4% on Monday morning even as other refiners were trading flat or down.
Other refinery companies such as Valero (VLO) and Phillips 66 (PSX) also have operations in the Northeast. But those refiners’ businesses on the Gulf Coast could suffer because their products can’t get to the Northeast via the pipeline, noted analysts at Tudor, Pickering, Holt.
Companies operating oil tankers could benefit as well if a prolonged outage creates a need for seaborn shipments from the Gulf to the Northeast. A U.S. law called the Jones Act prohibits vessels built overseas, or owned or operated by foreign companies, from transporting goods between U.S. ports. But that law could be waived if the shutdown continues.
Already some traders are booking ships to take gasoline from Europe to the U.S., according to Reuters. If shipping rates rise, it could benefit companies like Scorpio Tankers (STNG).
Some analysts also think that it is worth having some exposure to oil stocks in the event that prices for crude continue to rise, as they have in recent months. The pipeline attack is just one part of that thesis.
Some investors have become more bullish on commodities because of fears of inflation. Commodities tend to do well during inflationary periods. And Covid-related restrictions have been easing in many parts of the world, which could lead to more demand for oil products such as jet fuel.
J.P. Morgan analyst Shawn Quigg identified seven stocks with strong liquidity and a high correlation to Brent crude prices. The list includes ConocoPhillips (COP), ONEOK (OKE), Diamondback Energy (FANG), Pioneer Resources (PXD), EOG (EOG), Occidental Petroleum (OXY), and Marathon Oil (MRO).
Write to editors@barrons.com
"some" - Google News
May 11, 2021 at 12:35AM
https://ift.tt/3hcA7MI
Cyberattack on Key Pipeline Could Benefit Some Stocks - Barron's
"some" - Google News
https://ift.tt/37fuoxP
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Cyberattack on Key Pipeline Could Benefit Some Stocks - Barron's"
Post a Comment