Oil prices settle as Saudi Arabia assures markets of solid output
Singapore — Oil prices edged higher in early Asian trade on Thursday after days of turbulence, with markets soothed by Saudi Arabia’s pledge to restore full production by the end of September at facilities knocked out in drone and missile attacks last weekend.
Brent crude futures rose 8 cents to $63.68 a barrel by 1.39am GMT while US West Texas Intermediate (WTI) crude was up 12 cents to $58.23 a barrel.
The steadying of nerves, after a 2% drop on Wednesday and a 14% plunge on Monday, came after Saudi Arabia set out the timeline to full operation and also said it had managed to restore supplies to customers at levels prior to the attacks by drawing from its oil inventories.
Saudi Arabia, the world’s leading oil exporter, has said the crippling attack on its oil sites was “unquestionably sponsored” by bitter regional rival Iran. US President Donald Trump said there were many options short of war with Iran and added that he had ordered the US treasury to “substantially increase sanctions” on Tehran.
“Prices may have found equilibrium for now,” said Michael McCarthy, chief markets analyst at CMC Markets in Sydney. Quick recovery in Saudi oil production would confirm disruption could be temporary, he said.
Meanwhile oil analytics firm Kayrros estimated Saudi Arabia lost about 3.4-million barrels per day of oil output after crude oil inventories plunged nearly 10-million barrels as of September 16 compared with pre-attack levels.
Still, the head of the International Energy Agency said on Wednesday it does not see a need to release emergency oil stocks as markets are well supplied.
While tensions in the Middle East remained elevated, the White House’s response on Wednesday to Saudi producing evidence that it said implicated Iran in the attacks pointed to a more measured approach in handling the region’s issues, said McCarthy.
Separately, weekly data from the Energy Information Administration on US oil inventories provided a mixed snapshot.
Crude oil stockpiles at the world’s largest oil producer rose by 1.1-million barrels last week against analysts’ expectations for a drop of 2.5-million barrels.
However, stocks in Cushing, Oklahoma, the delivery point for benchmark futures, fell to the lowest since October 2018.