Oil extends losses after Saudi Arabia to restore output by end-Sept
SINGAPORE: Oil prices extended their losses from the previous session on Wednesday, after Saudi Arabia's energy minister said the Kingdom will restore lost oil production by the end of the month.
But investors remained cautious of potential tension in the Middle East after the United States said it believes the attacks that crippled Saudi Arabian oil facilities last weekend originated in southwestern Iran. Iran has denied involvement in the strikes.
Brent crude oil futures fell 36 cents, or 0.6%, to $64.19 a barrel by 0005 GMT, after tumbling 6.5% the previous session.
U.S. West Texas Intermediate (WTI) crude futures fell 43 cents, or 0.7%, to $58.91 a barrel, after sinking by 5.7% on Tuesday.
"In view of the vulnerability of Saudi's supply chain and the likelihood that such attacks could be repeated in the future, we expect the market to reprice the geopolitical risk premium in oil," BNP Paribas' Harry Tchilinguirian said in a note.
"The oil market has so far been complacent about recent developments in the Middle East. In our opinion, this will no longer be the case going forward."
Saudi Arabia sought to reassure markets after the attack on Saturday halved oil output, saying on Tuesday that full production would be restored by month's end.
Energy Minister Prince Abdulaziz bin Salman said on Tuesday that average oil production in September and October would be 9.89 million barrels per day and that the world's top oil exporter would ensure full oil supply commitments to its customers this month.
Saudi Aramco has informed some Asian refiners that it will supply full allocated volumes of crude oil in October, albeit with some changes.
Still, risks to oil prices remained after a U.S. official said that Washington believes the attacks originated in southwestern Iran.
Relations between the United States and Iran have deteriorated since U.S. President Donald Trump pulled out of the Iran nuclear accord last year and reimposed sanctions on its oil exports.
Tehran rejects the charges it was behind the strikes and on Tuesday ruled out talks with Trump.
U.S. crude inventories rose by 592,000 barrels in the week ended Sept. 13 to 422.5 million, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a decrease of 2.5 million barrels. - Reuters
NEW YORK: Oil prices tumbled about 6% on Tuesday after Saudi Arabia's energy minister said the country has managed to restore oil supplies to where they stood before weekend attacks on its facilities shut 5% of global oil output.
Saturday's attacks raised the spectre of a major supply shock in a market that in recent months has been preoccupied with demand concerns and faltering global growth. Oil surged as much as 20% at one point on Monday.
During a news conference on Tuesday, Saudi Energy Minister Prince Abdulaziz bin Salman said the kingdom has recovered supplies by tapping inventories, and lost oil output of 5.7 million barrels per day (bpd) by the end of September.
Brent crude futures sank $4.47, or 6.5%, to settle at $64.55 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $3.56, or 5.7%, to settle at $59.34 a barrel.
Brent sank more than 7% during the news conference.
"The latest news means that we will not be rushing to revise up our oil price forecast of $60 per barrel at end-2019. That said, there remain some important questions to be answered about the attacks, which may mean that we will have to consider a permanently higher risk premium in our price forecasts," said Caroline Bain, chief commodities economist for Capital Economics, in a note.
State-owned producer Saudi Aramco told some Asian refiners it would meet its oilcommitments, albeit with changes, sources said. The attacks on crude-processing facilities at Abqaiq and Khurais resulted in the largest single supply disruption in half a century, and threw into question Saudi Arabia's status as supplier of last resort.
(GRAPHIC: Global oil prices pull back but remain jittery: https://fingfx.thomsonreuters.com/gfx/ce/7/6484/6466/WTIBrentVolumes.png)
The prospect of releases from strategic oil reserves in the United States, and other industrialized countries that the International Energy Agency advises, such as Japan, have weighed on prices, but the geopolitical threat of retaliation is causing concerns.
U.S. Vice President Mike Pence said the United States was reviewing evidence that suggests Iran was behind the attacks.
"We're evaluating all the evidence. We're consulting with our allies. And the president will determine the best course of action in the days ahead," Pence said.
Washington believes the attacks originated in southwestern Iran, a U.S. official told Reuters.
Relations between the United States and Iran have deteriorated since U.S. President Donald Trump pulled out of the Iran nuclear accord last year and reimposed sanctions on its oilexports.
Tehran rejects the charges it was behind the strikes and on Tuesday ruled out talks with Trump. Saudi King Salman called on world governments to confront threats to oil supplies.
U.S. crude inventories rose by 592,000 barrels in the week ended Sept. 13 to 422.5 million, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a decrease of 2.5 million barrels.
Official U.S. government data will be released on Wednesday. - Reuters