WASHINGTON (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Brent crude on the Intercontinental Exchange edged higher early Friday. Oil products were boosted as the market eyes refinery run cuts in southeast Texas due to flooding from Tropical Storm Imelda, and crude grades are underpinned amid restoration efforts in Saudi Arabia after Saturday's attack on a critical oil processing plant and oil field that knocked 5.7 million barrels per day (bpd) of crude production offline.
Modest gains early Friday come ahead of the expiration of the October West Texas Intermediate futures contract this afternoon, while a stronger U.S. dollar, which reversed off a three-week low, is capping the upside.
Near 9:15 a.m. EDT, NYMEX October WTI futures were up $0.80 near $58.95 barrel (bbl), with the November contract at $59 bbl. ICE November Brent futures were $0.55 higher at $64.95. NYMEX October ULSD futures edged up 0.35 cents near $2.0080 gallon, and October RBOB futures were little changed at $1.70 gallon.
National Hurricane Center forecasts additional three to five inches of rainfall for the areas of upper Texas coast and southwest Louisiana Friday, compounding flash flooding in the region. Heavy flooding in Texas this week forced run cuts at several Gulf Coast refineries and disrupted liftings from wholesale distribution centers.
Valero announced Thursday it cut production at its 335,000 bpd refinery in Port Arthur after extensive flooding prevented trucks from removing sulfur extracted from motor fuels from the plant. ExxonMobil also shutdown units at its Beaumont chemical plant and reduced rates at its 369,024 bpd Beaumont refinery. As of Friday, Exxon Mobil Corp. continues to assess operations at its Texas oil refinery and confirmed it has finished shutting its Beaumont chemical plant.
Overnight reports indicate the Saudi-led coalition launched a military strike against Houthi rebels in northern Yemen as retaliation for last week's attack on its oil assets. Houthis claimed responsibility for the attack, although the Saudis and United States blame Iran for the precision attack on the heart of Saudi's oil industry.
The response came short of multilateral action addressing Iran's involvement in the attack that shut-in nearly 6% of global oil supply. U.S. Secretary of State Mike Pompeo said Friday Washington and allies were seeking a "peaceful resolution" with Iran. The remarks suggest a reversal in strategy after Pompeo called the attack an "act of war." Iran's foreign minister warned of "all-out war" if Iran is attacked.
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