DTN Oil Update
Oil Rises After Strike on Oil Hub Highlights Supply Risks
VIENNA (DTN) -- Oil prices rose Wednesday morning as Saudi Arabian energy infrastructure continued to suffer attacks, with the latest Houthi strike on the country's main export hub threatening to further tighten a supply-starved global fuels market.
By 9:05 a.m. EDT, ICE Brent for December delivery was up $1.26 to trade near $115.14 bbl, and NYMEX WTI for December delivery rose $1.91 to $101.81 bbl.
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Downstream, NYMEX ULSD for November delivery advanced $0.0351 to $4.8103 gallon, while front-month RBOB futures inched lower $0.0081 to $3.1295 gallon.
The U.S. Dollar Index was little changed, up 0.03 points to 102.195 against a basket of foreign currencies.
The Houthis on Tuesday claimed to have struck the 550,000-bpd capacity Ras Tanura refinery with a ballistic missile. Riyadh has not yet commented on any potential damage after reports of a large fire at the oil hub's export terminal circulated Tuesday. Ras Tanura not only houses the country's largest and oldest refinery, which has since 2022 stepped up to become a major diesel supplier for Europe, but is also one of Saudi Arabia's two main oil export hubs.
The kingdom's other major crude oil export outlet, the Red Sea port of Yanbu, was targeted by Houthi drones just last week, and the Tehran-allied militia on Monday alleged to have hit an oil pumping station along the East-West pipeline feeding the port. A similar incident last month led to a two-week shutdown of the pipeline and an ensuing export drought.
In the U.S., meanwhile, oil inventories may have declined for the fourth consecutive week, an American Petroleum Institute report published Tuesday suggested. Commercial crude oil stocks have held up comparatively well during most of the now nearly eight-month long supply crisis, largely due to the release of more than 133 million bbl from federal emergency stockpiles. While the delivery of significant volumes from the Strategic Petroleum Reserve ended last month, refiners continued to chase dizzying middle distillate cracks in October. The seasonally highest domestic crude oil demand in decades, as indicated by recent Energy Information Administration (EIA) data, may have contributed to yet another drop in inventories last week. The EIA's Weekly Petroleum Status Report for the week ended Oct. 23 is scheduled for 10:30 a.m. EDT release Wednesday.
Market participants are also awaiting the Federal Reserve's interest rate decision this afternoon. Chances of a rate hike just one month after the central bank increased its target rate for the first time in three years are low, despite sticky inflation remaining far above the 2%-target. CME Group's FedWatch tool attributes a 9.4% chance to a 25-basis point increase, and most observers expect the Federal Reserve to keep rates steady.
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