DTN Oil Update
WTI Surges Above $100 BBL Oil on Deepening Supply Crunch
VIENNA (DTN) -- Crude oil futures rallied to their highest since May Thursday (9/10) morning after a recent barrage of attacks on tankers in the Middle East and statements from Washington pointed to a deeper and longer-than-anticipated oil supply disruption. U.S. diesel futures, meanwhile, surged past their previous. Iran war-associated record high set in March.
By 08:50 a.m. EDT, ICE Brent for November delivery was up $3.62 to trade near $104.83 bbl, and NYMEX WTI for October delivery rose $4.03 to $100.08 bbl.
Downstream, NYMEX ULSD for October delivery advanced $0.1064 to $4.9074 gallon, and front-month RBOB futures added $0.1075 to $3.3181 gallon.
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The U.S. dollar index strengthened by 0.37 points to 99.18 against a basket of foreign currencies.
U.S. President Donald Trump on Wednesday said that the war would only end after the midterm elections in early November. This marked a drastic departure from the last six months of the White House messaging an imminent end to the conflict with an allegedly already defeated opponent.
Shipping through the Strait of Hormuz, meanwhile, has again become considerably riskier. Iranian forces claimed to have attacked ten tankers near the waterway Wednesday in response to the U.S. attacks Sept. 8 on five Iranian tankers. This latest flareup in military action not only further stymied Iranian oil exports, but is set to lead to fewer attempted crossings through the oil chokepoint.
The scale of actual physical oil supply disruptions remained difficult to quantify. In its most recent Short-Term Energy Outlook published Wednesday, the U.S. Energy Information Administration (EIA) estimated that shut-ins of crude oil output in the Middle East rose to 6.7 million bpd last month from 5 million bpd in July. OPEC's monthly report released earlier this morning, in contrast, saw a minute uptick in August production, as the surge in Iraqi output outweighed the drops from Iran and Saudi Arabia, according to estimates from secondary sources. Saudi Arabia's self-reported production levels, however, slumped from 8.14 million bpd in July to a 36-year low 6.24 million bpd. The International Energy Agency's monthly update containing August production estimates is scheduled for release on Friday (9/11).
The EIA's weekly U.S. crude oil and fuel inventory report, meanwhile, is on tap for 12 p.m. EDT today. The American Petroleum Institute said Sept. 9 that nationwide crude and gasoline stocks last week shrank by 300,000 bbl and 1.9 million bbl respectively, while diesel inventories expanded by 2 million bbl.
Karim Bastati | Senior Energy Analyst