DTN Oil Update
Oil Jumps as Houthi Attacks on Tankers Amplify Supply Woes
VIENNA (DTN) -- Oil and product futures rose for a fifth consecutive trading day Thursday morning on reports that two Saudi Arabian oil tankers have been struck in the Red Sea by Houthi forces who earlier this week announced a blockade of Saudi ports.
By 8:15 a.m. ET, ICE Brent for September delivery was up $4.98 to trade near $99.05 bbl, the highest since early June, and NYMEX WTI for September delivery rose $4.14 to $90.97 bbl.
Downstream, NYMEX ULSD futures for August delivery soared $0.1068 to $4.2556 gallon, and front-month RBOB futures advanced $0.0430 to $3.4577 gallon.
The U.S. Dollar Index strengthened by 0.191 points to 101.145 against a basket of foreign currencies.
The attacks by the Iran-aligned Yemeni militia put in jeopardy yet another vital oil shipping route from the Middle East to global consumers. In addition, they threaten to disrupt millions of bpd of crude supply rerouted from the locked-in Persian Gulf to Saudi Arabia's Red Sea port of Yanbu.
The opening of this new front in the re-escalating U.S.-Iran war supported the geopolitical risk premium on oil prices along with ramped up bellicose rhetoric from the White House. U.S. President Donald Trump on Wednesday announced that the U.S. will strike critical Iranian infrastructure, including bridges and power plants, for every vessel attacked by Iranian forces in the Strait of Hormuz. Tehran in response threatened retaliatory strikes on energy infrastructure in neighboring U.S.-allied countries, amplifying supply concerns.
Dimming peace prospects and growing supply disruptions against the backdrop of four months of rapidly dwindling global fuel inventories have propelled refining margins to all-time highs. U.S. refiners have been running at near maximum capacity for weeks, setting a post-pandemic high in crude oil processing despite diminished capacity, Energy Information Administration (EIA) data released Wednesday showed. This sustained high processing pace and accompanying maintenance deferments greatly increases outage risks, which ironically serves as yet another catalyst for soaring product cracks.
The EIA on Wednesday reported across-the-board builds to crude oil and road fuel inventories. However, they continued to be far below normal seasonal levels after months of steep draws. Volumes of national gasoline stockpiles, subject to seasonal swings, are at 211.3 million bbl not only at their lowest since November, but at the most depleted for this time of year since 2012.
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