Oil rose amid doubts about the speed of Saudi Arabia’s recovery from the weekend’s attack on its facilities that knocked out a large chunk of its production.
Futures gained 2.1% in New York after paring around half of Monday’s 15% surge over the past two days. The Saudis asked Iraq’s national oil company for as much as 20 million barrels of crude to supply its domestic refineries, Dow Jones reported. The kingdom’s damaged Abqaiq oil facility is operating at around 40% of its pre-attack levels and output should be fully restored by the end of the month, according to Saudi Aramco Chief Executive Officer Amin Nasser.
The market remains on edge over concerns that Saudi Arabia’s recovery from the attack will take longer than expected even though the kingdom has said it will honor its export commitments. There are also worries hostilities may flare again in the Middle East as Saudi Arabia said Iran unquestionably sponsored the strikes and U.S. President Donald Trump plans to add “some very significant sanctions” on the Persian nation this week.
“It’s an exaggeration that calm has been restored in the oil market” despite Saudi Arabia’s assurances on supply, said Tamas Varga, an analyst at PVM Oil Associates Ltd.
West Texas Intermediate crude for October delivery rose $1.20 to $59.31 a barrel on the New York Mercantile Exchange as of 11:32 a.m. in London. It dropped 2.1% on Wednesday following Tuesday’s 5.7% decline.
Brent for November settlement added $1.70 to $65.30 a barrel on the ICE Futures Europe Exchange after falling 1.5% on Wednesday. The global benchmark crude traded at a $6.07 premium to WTI for the same month.
There’s also no need to release emergency stockpiles because current supplies are adequate, International Energy Agency Executive Director Fatih Birol said on Wednesday. The group’s members held about 1.55 billion barrels of emergency crude stocks, more than enough to offset any disruption. The global oil market has enough resources to balance a large supply outage without requiring a strategic petroleum reserve release by developed nations, Goldman Sachs Group Inc. said in a note.
An Energy Information Administration report showed U.S. oil inventories rose by 1.06 million barrels last week. That was almost double what the American Petroleum Institute reported Tuesday and compared with analyst forecasts for a 2.25 million barrel decline. Gasoline stockpiles increased 781,000 barrels, while distillate supplies climbed 437,000 barrels, the EIA said.
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