Oil futures moved higher Thursday, after back-to-back losses that priced out most of the fear premium added to the U.S. benchmark earlier this week in the wake of the surprise Hamas attack on Israel.
Traders also reacted to a U.S. government report showing a more than 10 million-barrel weekly rise in domestic crude inventories, along with declines in petroleum product inventories.
Price action
-
West Texas Intermediate crude for November delivery
CL00,
+0.19% CL.1,
+0.19% CLX23,
+0.19%
rose 64 cents, or 0.8%, to $84.13 a barrel on the New York Mercantile Exchange after trading at a session low of $82.78 a barrel, a penny below its Friday close at $82.79. -
December Brent crude
BRN00,
+0.56% ,
the global benchmark, rose 81 cents, or 0.9%, to $86.63 a barrel on ICE Futures Europe. Brent ended Friday had at $84.58 a barrel. -
November gasoline
RBX23,
-1.58%
shed 1.1% to $2.1858 a gallon, while November heating oil
HOX23,
+0.11%
added 0.3% to $3.008 a gallon. -
Natural gas for November delivery
NGX23,
-0.71%
traded at $3.376 per million British thermal units, down nearly 0.1%.
Supply data
The Energy Information Administration on Thursday reported that U.S. commercial crude inventories rose by 10.2 million barrels for the week ended Oct. 6.
On average, analysts polled by S&P Global Commodity Insights expected the report to show an increase of 200,000 barrels in last week’s crude supplies. The American Petroleum Institute late Wednesday reported a 12.9 million barrel increase, according to a source citing the data.
The EIA report, which was released a day later than usual due to Monday’s holiday, also revealed supply declines of 1.3 million barrels for gasoline and 1.8 million barrels for distillates. Analysts forecast inventory declines of 1.1 million barrels for gasoline and 1.8 million barrels for distillates.
“Record production, lower exports and the peak of autumn refinery maintenance have colluded to result in a whopper of a build to crude inventories,” said Matt Smith, lead oil analyst, Americas, at Kpler. “Draws to the products have been inevitable given stymied refining activity.”
Still, oil prices are “taking the bearish build in its stride, given last night’s API report alluded to such a climb, as well as the fact that both exports and refining activity will rebound in the weeks ahead,” he said.
Crude stocks at the Cushing, Okla., Nymex delivery hub fell by 300,000 barrels for the week, the EIA said, while domestic production climbed by 300,000 barrels to 13.2 million barrels a day.
U.S. crude production is at a new all-time high, said Troy Vincent, senior market analyst at DTN. “U.S. shale production continues to prove those who have written its early obituary wrong, time and time again.”
In a separate report also released Thursday, the EIA Thursday reported that U.S. natural-gas supplies in storage rose by 84 billion cubic feet for the week ended Oct. 6. On average, analysts surveyed by S&P Global Commodity Insights forecast an increase of 91 billion cubic feet.
Also see: EIA expects a decline in this year’s U.S. natural-gas heating bills
Market drivers
The latest reporting on the news in the Middle East indicates Iran was aware that Hamas was planning an attack, but according to The Wall Street Journal, didn’t know the timing or scope of it. The report, citing U.S. intelligence agencies, was softer than the same newspaper’s assessment that Iran helped to plot the attack over several weeks.
So far, the fighting on Israel’s other borders has been limited, though Egyptian officials have said Hezbollah would join the fighting in the north if Israel launched a ground invasion of Gaza. The formation of a unity government in Israel suggests such an invasion is likely, according to reports.
Read: Israel-Gaza war scenarios: what might lift oil prices to $95, $100, and $115 a barrel
“A conflict in the Middle East will fuel a fear bid in oil markets as long as the world runs on refined products so until we see a ceasefire or truce called, which hopefully comes sooner than later, the upward pressure the conflict is having on oil prices will continue,” Tyler Richey, co-editor of Sevens Report Research, told MarketWatch.
Elsewhere, the Paris-based International Energy Agency on Thursday said that it now expects oil demand to grow by 2.3 million barrels a day this year, a hike of 100,000 barrels a day from last month’s report — translating into total demand averaging 101.9 million barrels a day, a new record.
At the same time, the agency cut its demand growth forecast for 2024, projecting total demand will average 102.7 million barrels a day.
Separately, in a monthly report, the Organization of the Petroleum Exporting Countries left its forecast for the global oil market largely unchanged Thursday, forecasting a rise in oil demand of 2.4 million barrels a day this year and a further increase of 2.2 million barrels a day in 2024.
Meanwhile, the Group of Seven and Australia announced Thursday the latest actions taken to enforce price caps on seaborne Russia oil that had been established in September of 2022. As part of that, they said the U.S. would impose sanctions on two entities that own vessels that used Price Cap Coalition service providers and that carried Russia crude oil above the price cap limit.
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