DTN Oil Update
Oil Prices Retreat on Easing Middle East Supply Concerns
VIENNA (DTN) -- Oil prices slid Tuesday morning amid growing signs of higher supply, as rebounding flows from the Middle East, plans of a sizable emergency stock release and a hefty Saudi price cut all pointed to a softer market, and a reported Yemeni advance against Houthis eased supply risk assessments.
By 9:25 a.m. EDT, ICE Brent for December delivery was down $2.31 to trade near $98.01 bbl, and NYMEX WTI for November delivery fell $1.37 to $88.06 bbl.
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Downstream, NYMEX ULSD for November delivery retreated $0.1097 to $4.4355 gallon, and front-month RBOB futures slid $0.0155 to $3.2307 gallon.
The U.S. Dollar Index softened by 0.33 points to 101.605 against a basket of foreign currencies.
Ship tracking experts estimate that crude oil exports from the region have recovered to around 90% of pre-war levels, spearheaded by Saudi efforts to bypass the semi-blockaded Strait of Hormuz via shuttle operations and pipeline diversions. The recovery in shipments of refined fuels, in contrast, continued to be much more muted, given the limited alternatives to loading at storage and refinery terminals inside the Persian Gulf.
Saudi Aramco earlier this week unexpectedly slashing official selling prices to Asia for November shipments also pointed to a looser market and higher availability, in addition to fueling concerns about the pace of Asian crude demand recovery.
Market participants also repriced the risk to Saudi oil exports posed by Houthi attacks. Yemen's government late Monday claimed to have retaken control of areas along the Red Sea and near Bab al-Mandab from Houthi forces. The threat to energy assets in the region remained elevated, however. Despite Monday's setback, the Tehran-allied militia continued to launch strikes on infrastructure inside Saudi Arabia.
In the U.S., the Energy Information Administration's newest Short-Term Energy Outlook is scheduled for release at 12 p.m. EDT Tuesday. The October edition of EIA's monthly forecast also includes its Winter Fuels Outlook, which is likely to receive special attention given that the country is set to enter heating season with distillate fuel oil stocks near record-lows.
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