DTN Oil

WASHINGTON, D.C. (DTN) -- West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange reversed losses and advanced more than 1% on Tuesday following unconfirmed reports Russian missiles crossed into Poland overnight, a member of the North Atlantic Treaty Organization, killing two people in a town near the Ukrainian border.

The attack, if confirmed, could trigger NATO's Article 5 provision, calling on all of the treaty's members to attack Russia in response to an unprovoked aggression. According to Article 5, an attack against one NATO member is considered an attack against all allies.

It is not immediately clear if the two rockets that landed in the border town of Przewodów was a result of Russia's mass bombardment of Ukrainian cities earlier today, with over 100 rockets launched, or was a deliberate attack on Poland itself.

Poland's Prime Minister, Mateusz Morawiecki, has convened the Committee of the Council of Ministers for National Security and Defense Affairs "as a matter of urgency," government spokesman Piotr Müller confirmed, with local media outlets claiming this is likely the result of the explosions on its eastern border.

Russia's Ministry of Defense moments ago claimed reports of Russian missiles landing in Poland are a "deliberate provocation" from Polish media. The Ministry added, "No strikes were made against targets near the Ukrainian-Polish state border by Russian weapons. The fragments published in a hot pursuit by the Polish media from the scene in the village of Przewodow have nothing to do with Russian weapons."

The situation remains fluid.

Earlier this morning, the oil complex came under selling pressures after International Energy Agency revised lower its demand expectations for the remainder of the year, citing, in part, geopolitical tensions in Ukraine.

In its monthly Oil Market Report released this morning, IEA estimated global oil demand growth would slow to 1.6 million bpd next year -- a considerable step down from the 2.1 million bpd annual growth rate seen this year. Mounting economic headwinds tied to inflationary pressures across major economies coupled with geopolitical uncertainties are thought to be responsible for slower demand growth next year.

For refined products, in particular, demand growth is forecasted to ease from 1.5 million bpd in 2021 to 400,000 bpd in 2022 before posting a small decline in 2023 under the weight of persistently high prices and slowing economies.

"Oil markets remain finely balanced going into the winter months, with OECD stocks trending at the lowest levels since 2004. The approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services will add further pressure on global oil balances, and, in particular, on already exceptionally tight diesel markets," aid IEA.

The Paris-based agency estimates oil flow from Russian ports rose by 165,000 bpd in October to 7.7 million bpd as shipments to the European Union, China, and India held up well into last month.

At settlement, NYMEX WTI for December delivery advanced $1.05 bbl to $86.92 bbl, and international crude benchmark ICE Brent rallied to $93.86 bbl, up $0.72. NYMEX December RBOB futures declined 1.24 cents to $2.5161 gallon, and December ULSD futures advanced 9.73 cents to $3.6413 gallon.

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