Oil futures headed lower for a second day in a row on Wednesday as crude-oil markets reacted to Saudi Arabia’s report that it would fully restore some 5.7 million-barrels-a-day of crude output by month ended after last weekends attacks.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman on Tuesday said at a news conference that Saudi Aramco has already restored 50% of lost production since the Saturday attacks. The Wall Street Journal reported that the facility is already supplying customers at pre-attack levels.
West Texas Intermediate crude for October delivery
the U.S. benchmark contract, lost 49 cents, or 0.8%, to $58.85 a barrel on the New York Mercantile Exchange, after shedding 5.7% on Tuesday. On Monday, it posted the largest daily gain for the most-active contract since Sept. 22, 2008 and finished at its highest level since May, according to Dow Jones Market Data.
November Brent crude
shed 31 cents, or 0.5%, to $64.24 a barrel on ICE Futures Europe, after sinking 6.5%, following the international benchmark contract’s 14.6% rise on Monday, the sharpest percentage gain on record dating back to 1988.
“The Saudi press conference on Tuesday put a positive spin on the situation after the attacks on Saturday,” said Robert Yawger, director of energy at Mizuho Securities USA, in a Wednesday report.
“Of course, Saudis were under pressure to put a positive spin on events, or their customers will go to the United States to buy their light crude,” he wrote.
The Saturday attack on Saudi Arabia’s Abqaiq plant and its Khurais oil field, temporarily disrupted an estimated 5% of global production and it also heightened tensions between the Saudis and Iranians and unsettled an already tense relationship between Washington and Tehran. Iran has been accused by U.S. intelligence of being involved in the attacks, which the Islamic Republic has denied.
Saudi Arabia is expected to host another news conference about its oil production later Wednesday.
Adding to the pressure on prices was an increase in supplies from U.S. producers. The American Petroleum Institute reported late Tuesday that U.S. crude supplies rose by 592,000 barrels for the week ended Sept. 13, according to sources. The API also reportedly showed a stockpile increase of 1.6 million barrels for gasoline, while distillate inventories rose by 2 million barrels. Inventory data from the Energy Information Administration will be released Wednesday at 10:30 a.m. Eastern Time.
Analysts polled by S&P Global Platts, on average, forecast a fall of 2 million barrels in last week’s crude inventories. Gasoline stockpiles were expected to fall by 800,000 barrels, but distillate supplies were seen higher by 300,000 barrels.
Investors will also be focused on the Federal Reserve as it looks to assess the health of the U.S. economy and how that may affect oil demand. The Fed’s policy statement will be released at 2 p.m. and Fed Chairman Jerome Powell will host a news conference a half-hour later as crude prices are settling.
Elsewhere on Nymex, October gasoline
fell 1.1% to $1.656 a gallon, adding to Tuesday’s 4.4% skid, and October heating oil
shed 0.6% to $1.979 a gallon, after its 4.5% fall.
October natural gas
meanwhile, added 0.5%, to trade at $2.682 per million British thermal units, erasing a 0.5% decline from a day ago.