Brent rises 1.4% to $115.47 as oil supply concerns return
Key Facts
Brent crude futures rose 1.4% to $115.47 a barrel at 0435 GMT on Wednesday, October 28, reversing a decline of about $2 in the previous session. U.S. West Texas Intermediate crude rose by the same percentage to $101.33 a barrel at the same time. A Reuters report via Euronext linked the price rise to renewed supply concerns after reports that Ras Tanura refinery had been targeted. Reports attributed the claim that the facility was targeted to the Houthis, but Saudi authorities did not immediately confirm the strike. The refinery has production capacity of 550,000 barrels a day, making the possibility of disruption a focus of market concerns about oil flows.
Moves in the oil market came amid a broader security escalation. Saudi authorities said they intercepted and destroyed two ballistic missiles launched toward Riyadh, then air defenses destroyed three more missiles fired toward the Eastern Province. The Associated Press reported that authorities attributed the missiles to the Iran-backed Houthis. These events add a security backdrop to concerns about the impact of attacks on energy infrastructure, but do not establish that Ras Tanura refinery was damaged. In its oil report, Reuters described prices as rising again after Tuesday's decline, with supply concerns returning. The refinery, with capacity of 550,000 barrels a day, remained central to the report because of its production scale.
U.S. inventory data helped shape the supply picture watched by traders. American Petroleum Institute data showed crude inventories fell by 2.03 million barrels in the week ended October 23, according to sources cited by a Reuters report. By contrast, analysts polled by Reuters had expected an increase of about 15,000 barrels during the same week. The gap between the decline recorded in the institute's data and earlier forecasts underscores why the market is awaiting the official government reading. The report said investors were waiting for the U.S. Energy Information Administration's weekly report, due later on Wednesday, for more clarity on inventories. The wait comes as prices remain sensitive to risks of supply disruptions in the region.
Political developments involving Iran remained another factor watched by the oil market. ING Bank analysts said prices remained elevated as the market awaited greater clarity on the U.S. president's next move toward Iran. That wait places crude prices in a broader context than daily inventory fluctuations, as traders monitor U.S. policy toward Tehran alongside energy security developments. The report did not estimate the scale of the impact of any potential move, but cited analysts as saying the lack of clarity had kept prices at elevated levels. This comes as supply concerns returned to the fore after reports that the refinery was targeted, without immediate Saudi confirmation of the strike.
Market attention is also expected to turn to the upcoming OPEC+ meeting on Sunday, where producers were expected to keep oil output targets for December unchanged. A Reuters report said the market would watch the meeting as it tracks upcoming supply decisions. That puts the producers' meeting among the near-term events that may matter to traders after prices swung from Tuesday's decline to Wednesday's rise. The report did not give a final decision on targets, but relayed the prevailing expectation ahead of the meeting. Until the official U.S. inventory report and the OPEC+ meeting, supply data and political and security developments remained key elements of the oil market picture.