Oil steadies amid Middle East tension
Market news selected by the DBS Chief Investment Office
After being roiled earlier in the week by an attack on a key Saudi Arabian facility, oil traders turned their focus to a storm flooding the US Gulf Coast.
Futures gave up early gains Thursday (19 September) to settle little changed in New York. The remnants of Tropical Storm Imelda dumped more than three feet of rain on parts of the Texas coast, curbing refinery operations and shutting a key pipeline. The International Energy Agency’s Executive Director Fatih Birol said the global oil market remains well supplied and ruled out any release of strategic reserves in the wake of the Saudi attack.
Concerns that tensions in the Persian Gulf would boil over were somewhat calmed when US Secretary of State Mike Pompeo said President Donald Trump wants a peaceful resolution to the aerial attacks on Saudi facilities. Days after more than 5m barrels a day of the kingdom’s output were knocked offline, the Saudis were scouring global markets for fuels and picking up one-time supplies, people familiar with the matter said.
The Marketlink pipeline carrying oil from Cushing, Oklahoma, the delivery point for New York-traded futures, to refineries in Texas was idled, people familiar with the situation said. That helped push October futures to a discount to November. The flooding and power outages also forced refineries around Port Arthur and Beaumont to reduce operating rates, and shut two huge terminals used to export crude and fuel.
West Texas Intermediate (WTI) crude for October delivery settled 0.03% higher at USD58.13 a barrel on the New York Mercantile Exchange. The October-November spread sank to -6 US cents, the first time it settled in contango, where near-term prices are lower than those further out, since 14 August.
Brent for November settlement rose 1.26% to USD64.40 a barrel on the ICE Futures Europe Exchange. The global benchmark crude traded at a USD6.21 premium to WTI for the same month. – Bloomberg News.
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