WTI jumps 2.5% to $102.42 as supply concerns return
Key Facts
West Texas Intermediate rose $2.52, or 2.5%, to $102.42 a barrel at 1442 GMT on Oct. 28, while Brent gained $1.81, or 1.6%, to $115.69, according to Reuters. WTI settled at $103.30, compared with $99.90 on Oct. 27, according to EL7 data. The rise came after the Houthi group said it had struck Saudi Arabia’s Ras Tanura refinery with a ballistic missile, with no immediate Saudi confirmation. The Associated Press was unable to verify the claim, and Saudi Arabia issued no comment. The report revived concerns about supply disruptions, as prices rose alongside a larger-than-expected draw in U.S. crude inventories.
Ras Tanura has refining capacity of 550,000 barrels per day, according to Reuters, making reports that it was targeted a focus for the oil market despite the account remaining unconfirmed. Saudi authorities said air defenses intercepted and destroyed three ballistic missiles launched toward the Eastern Province on Oct. 27, according to the Associated Press. Reuters reported that most Saudi oil exports pass through the ports of Ras Tanura on the Gulf and Yanbu on the Red Sea. Ras Tanura was temporarily closed as a precaution during the first months of the Iran war, according to Reuters. This backdrop places the facility and major ports within the context of the market’s sensitivity to any security developments, without establishing that the refinery was directly hit.
On inventories, the U.S. Energy Information Administration said crude stocks fell 1.9 million barrels in the week ended Oct. 23, while a Reuters poll had expected an increase of 15,000 barrels. The official reading confirmed a move contrary to market expectations, coinciding with Wednesday’s rise in oil prices. An earlier estimate from the American Petroleum Institute had pointed to a stock decline, but the U.S. agency’s data became the latest available reading in Reuters’ update. Crude had fallen nearly $2 on Tuesday after talks in the Middle East eased supply concerns. The rebound the following day came as shrinking inventories coincided with fears of regional escalation.
ING analysts said oil prices “remain elevated as the market waits for more clarity on President Trump’s next move on Iran.” Reuters reported that a new draft peace proposal was presented to Tehran on Sunday, with a response expected by the end of the week. An Iranian official described the ideas as unacceptable and not an offer, according to the report. Analysts are watching for the possibility of renewed U.S. strikes on Iran at some point after the U.S. midterm elections on Nov. 3, Reuters reported. That puts the course of the talks and U.S. developments among the near-term factors monitored by the oil market.
The market is also focused on the following Sunday’s OPEC+ meeting, where producers were expected to keep December output targets unchanged, according to people familiar with the matter cited by Reuters. The report said output from most of the group’s seven core members was below their targets: Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman. This comes as traders said Russian crude exports from Baltic and Black Sea ports could fall in the following month. Traders linked the possibility to domestic refineries increasing diesel production after an agreement with Washington earlier this month. The EIA is scheduled to release its next weekly report on Nov. 12, following the data week ended Nov. 6, because of the Veterans Day holiday, according to the agency’s schedule.