Oil futures climbed in early trading Wednesday as the market weighed two possible sources of disruption against signs that more crude was moving out of the Middle East. At 0400 GMT, Reuters reported Brent futures at $101.63 a barrel, up $1.05, while US West Texas Intermediate was $90.24, up 80 cents.
A Gulf storm puts production and refining in focus
The National Hurricane Center said Tropical Depression Nine was in the Gulf late Tuesday, moving east at 5 mph with maximum sustained winds of 35 mph, and was forecast to strengthen quickly. Reuters said the system was expected to cross areas containing oil and gas facilities.
Offshore areas in the storm’s projected path account for 15% of US crude production and 5% of natural gas output, according to Reuters. The storm could also affect six refineries, while Gulf states hold about half of the country’s 18.2 million-barrel-per-day refining capacity.
The market was already watching inventories. US crude stocks fell by 2.09 million barrels in the week ended October 2, according to American Petroleum Institute data cited by Reuters.
Middle East supply is pulling in both directions
Supply flows have been recovering even as security risks persist. Saudi Arabia’s energy minister said the kingdom’s East-West pipeline had reached 5.8 million barrels a day. Vitol’s chief executive said roughly 12 million barrels a day of crude and 2 million barrels a day of refined products had left the Middle East during the previous seven to 10 days, Reuters reported.
At the same time, Saudi airports in Jazan and Najran were targeted Monday evening as fighting between Saudi-backed Yemeni forces and the Iran-backed Houthis escalated, according to the Saudi aviation authority as cited by Reuters. That mix of improving flows and fresh disruption risk left traders balancing more barrels on the water against the possibility of new interruptions.
