Oil Futures Edge Higher

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange settled higher Monday, as markets gauge recovery efforts at Saudi Aramco's oil facilities after attacks severely disrupted regional crude supply.

NYMEX November West Texas Intermediate futures gained $0.55 to settle at $58.64 barrel (bbl), while ICE November Brent advanced $0.49 to a $64.77 bbl settlement. NYMEX October ULSD futures moved 1.07 cents higher to end the session at $1.9970 gallon, and the October RBOB contract was up 0.54 cents at $1.6838 gallon settlement.

Oil prices flipped between modest gains and losses on Monday amid conflicting reports of Aramco's recovery progress at its largest crude processing facility in Abqaiq. Reuters reported Aramco notified its Asian customers of a potential switch from light crude to medium and heavy grades, starting from Oct. 1. According to the report, the company also pushed back crude oil shipments by seven to ten days.

Analysts believe Saudi Aramco is drawing down Arab heavy from inventories to replace lighter crude oil grades, with stockpiles estimated at 170 million to 175 million bbl, which could last up to 25 days.

Meanwhile, Aramco attempts speedy repairs on damaged units in Abqaiq and the Khurais oil field following attacks that shut-in 5.7 million barrels per day (bpd) of oil nine days ago. Saudi oil minister Prince Abdulaziz assured markets the company would restore full capacity of 12 million bpd by the end of November. Still, some Saudi officials have reportedly expressed doubts that the target of a seven-week return could be met.

In order to complete repairs, Aramco indicated it needs to ship equipment from both the United States and Europe.

Separately, Iran released a British oil tanker detained two months ago by the Islamic Revolutionary Guard near the Strait of Hormuz. The move comes ahead of the gathering of world leaders at the United Nations General Assembly this week, where U.S. President Donald Trump was reportedly eyeing a meeting with Iranian President Hassan Rouhani ahead of the Sept. 14 attack on Saudi's oil infrastructure. The United States and Saudi Arabia blame Tehran for the attack and are seeking an international coalition to condemn Iran.

In response to attacks on Saudi oil facilities, Washington sanctioned the Iranian National Bank this weekend and authorized deployment of hundreds of troops to the Middle East.

Oil futures came under selling pressure earlier in the session after overnight data showed a steep decline in Eurozone Purchasing Manager's Index, stoking fears of further deterioration in global economic growth.

Despite massive stimulus from the European Central Bank, Germany's manufacturing index collapsed to 42.7 in early September, driving the country deeper into economic contraction. Germany's PMI came at 49.1, the lowest reading since 2012. In the United States, the reading for manufacturing PMI came at 51.0, little changed from August's 51.2, the weakest reading in three years. U.S. PMI has consistently flashed signs of a slowing growth in industrial sector, albeit at slower pace compared to other major global economies. U.S. dollar edged higher to 98.455 one-week high in afternoon index trading.

Liubov Georges can be reached at liubov.georges@dtn.com

(CZ)