Brent Rises 3.2% to $112.33 Amid Supply Disruption Fears
Key Facts
Brent crude rose 3.2% to $112.33 a barrel in Thursday’s session, while West Texas Intermediate climbed 2.2% to $99.29, as concerns grew over disruptions to energy supplies in the Middle East. Reuters attributed the gains to fears raised by Houthi attacks in Saudi Arabia, as Aramco ordered its Dhahran headquarters evacuated on Thursday amid escalating fighting. EL7 data for the Oct. 23 close show Brent ending the session at $114.29 a barrel, while West Texas closed at $100.67. Those closing prices differ from prices recorded during Thursday’s session and reflect continued gains in both crude benchmarks through the end of the week. The session’s rise came as traders weighed the risk of supply disruptions against U.S. inventory data.
Brent’s weekly gains were on track to reach about 4%, putting it on course for a third consecutive weekly rise, while West Texas was headed for a weekly loss of 0.8%. The divergence highlights the benchmarks’ different performances over the week despite both rising in Thursday’s session. Supply-related risks remained a key driver of prices, while U.S. data showed a decline in commercial crude inventories. The picture for oil products was mixed, with gasoline inventories falling while distillate stocks increased. This meant inventory data showed draws in some products and an increase in others, while geopolitical concerns continued to support the market.
A U.S. Energy Information Administration report released on Oct. 21 showed data for the week ended Oct. 16. U.S. gasoline inventories fell 2.95 million barrels to about 205.3 million barrels, according to data cited by Investing.com. By contrast, distillate inventories rose 1.68 million barrels to about 104.3 million barrels. The divergence offered a different reading for motor fuel and distillates, with product inventories showing no single direction. The report coincided with higher prices driven by supply concerns, while the gasoline draw remained part of the U.S. market backdrop.
A PVM analyst said concerns about attacks on ships in the Strait of Hormuz and Houthi strikes on Saudi Arabia and its oil infrastructure outweighed reports that crude exports from the Middle East had returned to levels above those before the conflict. The analyst said, "Reports of Middle East crude oil exports exceeding pre-conflict levels are being met, and then some, by attacks on ships in the Strait of Hormuz." Morgan Stanley, citing Kpler data, estimated regional crude exports at about 17 million barrels a day in the previous week, compared with an average of about 18 million barrels a day during the twelve months before the Iran war began. Those figures put exports below the pre-war period’s average despite reports that they had exceeded pre-conflict levels. Attacks on shipping and Saudi facilities remain the source of concern the analyst linked to additional supply risks.
In the United States, refinery crude inputs were 16.649 million barrels a day in the week of Oct. 16, compared with 16.615 million the previous week. The operating rate for operable refining capacity fell to 93.4% from 93.5% the previous week. The EIA also estimated domestic crude production at 13.269 million barrels a day, down from 13.679 million the previous week. The data combine a slight increase in refinery inputs with a decline in domestic production, while the inventory report showed gasoline stocks falling and distillate stocks rising. The EIA will release its next weekly report on Oct. 28, after publishing its previous report on Oct. 21.