Crude Oil Brent (F) Futures Market News and Commentary
Oct WTI crude oil (CLV19) on Wednesday closed down by -1.23 (-2.07%), Nov Brent crude oil (CBX19) closed down by -0.95 (-1.47%), and Oct RBOB gasoline (RBV19) closed down -0.0174 (-1.04%). The energy complex fell Wednesday on the outlook for Saudi crude production to recover sooner than expected along with an unexpected increase in weekly EIA U.S. crude and gasoline inventories. Crude prices opened lower Wednesday after processing at Saudi Arabia's Abqaiq oil processing facility recovered to 41% of capacity or to 2 million bpd and Aramco said crude processing at Abqaiq will return to the pre-attack level of about 4.9 million bpd by the end of the month. Crude prices on Monday surged to 3-3/4 month highs after Saudi Arabia lost about half of its oil production output (i.e., 5 mln bpd of total 9.8 mln bpd production), representing about 5% of total world output, due to a drone/missile attack and fire at its key Abqaiq oil processing facility on Saturday. The energy complex remained on the defensive Wednesday after the EIA reported today that U.S. crude inventories unexpectedly climbed +1.058 million bbl, above expectations of a -2.0 million bbl draw. Also, EIA gasoline supplies unexpectedly rose +781,00 bbl, higher than expectations of -750,000 bbl. Crude prices recovered from their worst levels Wednesday after the Saudi Arabian Defense Ministry said that Saturday's attacks on Saudi oil facilities were "unquestionably sponsored by Iran." The remarks may lead to escalation of the crisis if Saudi Arabia and/or the U.S. retaliates against Iran for the attacks. Wednesday's global economic data was supportive for economic growth and energy demand after U.S. Aug housing starts jumped +12.3% to a 12-year high of 1.364 million, stronger than expectations of +5.0% to 1.250 million. Also, Aug building permits unexpectedly rose +7.7% to a 12-1/4 year high of 1.419 million, stronger than expectations of -1.3% to 1.300 million. In addition, Japanese trade data today showed Japan Aug exports fell -8.2% y/y, stronger than expectations of -10.0% y/y. Wednesday’s weekly EIA data showed that U.S. crude oil inventories as of Sep 13 were -0.8% below the seasonal 5-year average, gasoline inventories were +3.8% above the 5-year average, and distillate inventories were -5.6% below the 5-year average. U.S. crude production in the week ended Sep 13 was unchanged at 12.4 million bpd, just below the record high of 12.5 million bpd in the week of Aug 23.