WASHINGTON (DTN) -- Fading from session highs, New York Mercantile Exchange West Texas Intermediate ended flat and Brent crude on the Intercontinental Exchange posted modest gains on Thursday. However, NYMEX RBOB and ULSD futures gained more than 1.5% on the session, bolstered by severe flooding from Tropical Storm Imelda that has disrupted refinery operations in Beaumont and Port Arthur, Texas.
NYMEX October WTI contract settled little changed at $58.13 barrel (bbl), while November WTI futures ended the session at $0.05 premium to the expiring contract. ICE November Brent crude settled $0.80 higher at $64.40 bbl, with the WTI-Brent spread widening to a $6.27 bbl six-week high on the session, indicating elevated geopolitical risk priced in the international benchmark. NYMEX October ULSD futures gained 3.16 cents to $2.0049 gallon, and the October RBOB contract advanced 4.3 cents at $1.7007 gallon, with both contracts boosted by flooding in southeast Texas that, in addition to refinery run cuts, also disrupt liftings from wholesale distribution centers.
Thursday afternoon, the National Hurricane Center forecasted another five to 10 inches of rain in southeast Texas, and two to six inches for southwest Louisiana. Officials are discouraging driving in the flooded regions.
Markets remained gripped with uncertainty on Thursday over the scale of disruption to oil supplies in Saudi Arabia and physical impact on regional supply chain. Amid the lack of incoming information from Aramco, crude contracts jumped more than 2% earlier in the session on reports the Saudis imported oil from Iraq to shore up supply and to meet export obligations.
Following the weekend attack, speculation of severe supply shortfall in one of the world's largest crude producers spooked markets, although the Saudis calmed markets Tuesday by announcing the 5.7 million barrels per day (bpd) in oil shut-in by the attack would again flow by month's end, with 70% of the lost output already restored.
Still, damage from the attack is not completely assessed. The latest satellite images analyzed by Kayrros Energy show severe damage to five units within the Abqaiq oil processing facility, while another eight units seemed unscathed. In addition, images show increased flaring intensity throughout the country's producing fields, suggesting Aramco is struggling to bring oil to their refineries.
Ship-tracking service Kpler this morning said several tankers loaded Arab medium or heavy volumes instead of Arab light crude, as Aramco contends with shortages.
Javad Zarif, Iran's foreign minister, has repeatedly denied Iran's involvement in the attacks, and today warned of an "all-out war" in the event the United States or Saudi Arabia attacked the Islamic Republic, and questioned whether Saudi Arabia was prepared to fight "to the last American soldier."
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