DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices jumped Thursday morning amid growing supply risks as Iran was stepping up attacks on tankers in the Strait of Hormuz, and the first Hurricane of the season forced shut a quarter of U.S. offshore oil production.

By 9 a.m. EDT, ICE Brent for December delivery was up $4.59 to trade near $104.79 bbl, and NYMEX WTI for November delivery rose $4.20 to $92.48 bbl.

Downstream, NYMEX ULSD for November delivery advanced $0.1810 to $4.8037 gallon, and front-month RBOB futures gained $0.1257 to $3.3599 gallon.

The U.S. Dollar Index strengthened by 0.15 points to 102.16 against a basket of foreign currencies.

Iranian attacks on commercial vessels in the strait have so far this month been more frequent than at any time since the beginning of the war in late February, threatening a shaky recovery in oil flows from the region. The Houthis, meanwhile, on Thursday issued a warning to Saudi oil workers, saying that Saudi Arabian energy assets are potential targets for retaliatory strikes.

In the Gulf of Mexico, meanwhile, Hurricane Isaias has of Wednesday forced shut 25% of offshore oil production, amounting to more than 500,000 bpd, the newly formed Marine Minerals Administration of the Department of the Interior said. According to DTN WeatherOps, the storm is set to further strengthen before it will make landfall between Alabama and Florida later this week.

A bullish U.S. inventory report published Wednesday also lent price support. According to Energy Information Administration data, commercial crude oil inventories shrank 3.2 million bbl last week, bringing total crude stockpiles including volumes in the Strategic Petroleum Reserve to 707.1 million bbl, some 14.5% lower than in the corresponding reporting week last year. The report also revealed that distillate fuel oil stocks continued to slide, with nationwide ultra-low sulfur diesel inventories trailing year-ago levels by more than 15%.

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