Oil Slides as Focus Shifts to Quick Return of Saudi Supply
The global oil benchmark, which jumped to just shy of $72 a barrel in reaction to the disruptions, was back to about $64.
(Bloomberg) -- Crude declined as investors shifted attention to a speedy return of Saudi Arabia’s crude production amid signals that global inventories are plentiful.
Futures dropped 2.1% on Wednesday in New York. The kingdom’s damaged Abqaiq oil facility is now operating at around 40% of its pre-attack levels and the facility should return to about 4.9 million barrels by the end of the month, Aramco Chief Executive Officer Amin Nasser said Tuesday. Meanwhile, the International Energy Agency’s Executive Director Fatih Birol said the oil market remains well supplied with ample stockpiles, despite the weekend attacks.
The "Saudi oil minister said production will be back," reassuring supply for the market, said Bob Yawger, director of the futures division at Mizuho Securities USA.
Earlier in the session, oil had eased some losses after Saudi Defense Ministry spokesman Turki al-Maliki said Saturday’s attacks on the kingdom’s critical oil infrastructure were “unquestionably sponsored by Iran” and did not originate from Yemen.
Iran has denied responsibility for the aerial attack that shut 5% of global supply, with President Hassan Rouhani saying it was carried out by Yemeni rebels fighting the Saudi-led coalition. President Donald Trump said the U.S. will add “some very significant sanctions” and announce them within the next 48 hours.
The IEA’s Birol also said its members held about 1.55 billion barrels of emergency oil stocks, which are more than enough to offset any disruption.
West Texas Intermediate crude for October delivery dropped $1.23 to settle at $58.11 a barrel at the New York Mercantile Exchange.
Brent for November settlement slid 95 cents to end the session at $63.60 a barrel on the ICE Futures Europe Exchange, and traded at a $5.56 premium to WTI for the same month.
An Energy Information Administration report showed domestic oil inventories rose by 1.06 million barrels last week, about double what the American Petroleum Institute reported Tuesday. Gasoline stockpiles increased 781,000 barrels, while distillate supplies increased 437,000 barrels.
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--With assistance from Jessica Summers.
To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.net
To contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, Jessica Summers, Christine Buurma
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