DTN Oil Update
Oil Rises on Aramco Attack, IEA Diesel Tightness Outlook
HOUSTON (DTN) -- Oil futures settled higher Wednesday (10/14) after reports that Houthi rebels attacked Saudi Aramco's headquarters, heightening concerns over Saudi Arabia's critical energy infrastructure. The bullish sentiment was supported also by the release of an International Energy Agency (IEA) projection warning of a prolonged diesel shortage.
AP, citing two regional officials, reported that Iran-backed Houthi rebels struck Aramco's headquarter Tuesday night, damaging offices used by its chief executive and other senior officials. Saudi Arabia's energy ministry characterized the incident as a "limited fire" at the building.
Recent Houthi attacks on Saudi Arabia oil infrastructure and the Riyadh international airport last Saturday, have highlighted the fragility of the ongoing oil supply recovery from the Middle East.
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The NYMEX WTI futures contract climbed $1.05 to $95.19 bbl, while ICE Brent for December delivery edged up $0.40 to $106.09 bbl.
Downstream, NYMEX ULSD for November delivery increased $0.0114 to $4.9458 gallon, and front-month RBOB futures rose $0.0072 to $3.2573 gallon.
The U.S. dollar index rose 0.346 points to 102.735 on the day in response to the September U.S. inflation report.
U.S. consumer price Index (CPI) increased 0.6% in September from 0.4% in August on a seasonally adjusted basis as gasoline surged 9.10%, the Bureau of Labor Statistics (BLS) reported Wednesday. The inflation data was in line with market expectations.
Gasoline accounted for more than half of the monthly increase in the all-items CPI, BLS said. The energy index jumped 5.20% after rising 2.10% in August. Before seasonal adjustment, gasoline prices rose 6.50%.
Separately, traders continue monitoring further escalation of the Middle East conflict amid expectations of limited global supplies of diesel despite the recent U.S.- U.S. energy deal to release additional Russian diesel barrel to the international markets.
On Wednesday, the IEA warned that global diesel markets may be heading into peak winter demand season with little capacity to absorb supply shocks. Even the expected recovery in refinery runs over the next two months would not resolve the shortage, leaving depleted well into 2027, IEA said.
The EIA projected a decline in oil demand this year to 2.6 million bpd from 2.5 million bpd, with diesel expected to account for a quarter of the drop.
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