DTN Oil Update
Oil Rises Amid Lingering Supply Risks, Tight Fuels Market
VIENNA (DTN) -- Oil prices edged higher Wednesday morning as threats to Middle Eastern flows and tightening global fuel supplies outweighed the rebound in crude oil exports from the region.
By 9:15 a.m. EDT, ICE Brent for December delivery was up $1.10 to trade near $101.68 bbl, and NYMEX WTI for November delivery rose $0.50 to $89.94 bbl.
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Downstream, NYMEX ULSD for November delivery soared $0.1450 to $4.7144 gallon, and front-month RBOB futures advanced $0.0772 to $3.3504 gallon.
The U.S. Dollar Index jumped 0.595 points to 102.2 against a basket of foreign currencies.
Intensifying fighting in Yemen amid a Saudi-backed offensive against Houthi rebels raised supply woes, as did the recent increase in Iranian attacks on commercial vessels in the Strait of Hormuz. Maritime safety watchdogs have so far this month recorded as many strikes as in all of September, and the Houthis have since Sunday stepped up drone and missile attacks on infrastructure in Yemen and Saudi Arabia.
Globally, crude oil supply disruptions have considerably eased from their peaks earlier this year. Refined fuels supply, in contrast, has stayed tight despite the resurgence in shipping. While crude oil flows have rebounded to around 80% to 90% of ante bellum levels, refined product streams from the Persian Gulf stayed constricted at around 50% to 60% of their pre-war pace, according to ship tracking data.
In addition, Ukrainian attacks on Russian energy infrastructure have crimped global fuels supply. Experts estimate that a little over half of Russian refining capacity has now been forced offline, further limiting global fuels production and raising the likelihood that the country will keep extending fuel export bans to stem domestic shortages.
U.S. inventories have reflected these lopsided supply developments. Commercial crude oil stockpiles are slightly above year-ago levels, albeit in no small part due to massive SPR releases, while road fuel inventories continue to hover far below typical levels. Diesel and heating oil stocks are the most affected, with nationwide distillate fuel oil inventories ending September down 15% year-on-year, according to U.S. Energy Information Administration (EIA) data.
The American Petroleum Institute on late Tuesday estimated that crude oil and gasoline inventories last week shrank by 2.1 and 1.4 million bbl, respectively, while distillate fuel oil inventories expanded by a modest 461,000 bbl. Official weekly inventory data from the EIA is scheduled for 10:30 a.m. EDT release Wednesday.
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