WTI Surges Above $100 BBL Oil on Deepening Supply Crunch


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Crude oil futures rallied to their highest since May 
Thursday (9/10) morning after a recent barrage of attacks on tankers in the 
Middle East and statements from Washington pointed to a deeper and 
longer-than-anticipated oil supply disruption. U.S. diesel futures, meanwhile, 
surged past their previous Iran war-associated record high set in March.

   By 08:50am ET, ICE Brent for November delivery was up $3.62 to trade near 
$104.83 bbl, and NYMEX WTI for October delivery rose $4.03 to $100.08 bbl.

   Downstream, NYMEX ULSD for October delivery advanced $0.1064 to $4.9074 
gallon, and front-month RBOB futures added $0.1075 to $3.3181 gallon.

   The US dollar index strengthened by 0.37 points to 99.18 against a basket of 
foreign currencies.

   U.S. President Donald Trump on Wednesday said that the war would only end 
after the midterm elections in early November. This marked a drastic departure 
from the last six months of the White House messaging an imminent end to the 
conflict with an allegedly already defeated opponent.

   Shipping through the Strait of Hormuz, meanwhile, has again become 
considerably riskier. Iranian forces claimed to have attacked ten tankers near 
the waterway Wednesday in response to Tuesday's U.S. attacks on five Iranian 
tankers. This latest flareup in military action not only further stymied 
Iranian oil exports, but is set to lead to fewer attempted crossings through 
the oil chokepoint.

   The scale of actual physical oil supply disruptions remained difficult to 
quantify. In its most recent Short-Term Energy Outlook published Wednesday, the 
U.S. Energy Information Administration (EIA) estimated that shut-ins of crude 
oil output in the Middle East rose to 6.7 million bpd last month from 5 million 
bpd in July. OPEC's monthly report released earlier this morning, in contrast, 
saw a minute uptick in August production, as the surge in Iraqi output 
outweighed the drops from Iran and Saudi Arabia, according to estimates from 
secondary sources. Saudi Arabia's self-reported production levels, however, 
slumped from 8.14 million bpd in July to a 36-year low 6.24 million bpd. The 
International Energy Agency's monthly update containing August production 
estimates is scheduled for release on Friday (9/11).

   The EIA's weekly U.S. crude oil and fuel inventory report, meanwhile, is on 
tap for 12pm ET today. The American Petroleum Institute on Wednesday said that 
nationwide crude and gasoline stocks last week shrank by 300,000 bbl and 1.9 
million bbl respectively, while diesel inventories expanded by 2 million bbl.




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