Oil Futures Surge on Tanker Attack, USD Slides to 3wks Low
WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures and Brent
crude on the Intercontinental Exchange extended gains in overnight trade after
a reported missile attack struck an Iranian oil tanker off the coast of Saudi
Arabia, reigniting regional rivalries and concerns over security of oil
infrastructure in the Persian Gulf.
U.S. dollar weakened 0.39% in early index trading to a 97.92 fresh
three-week low, also boosting the U.S. crude contract.
Around 8 AM ET, NYMEX November West Texas Intermediate futures were up $0.75
near $54.30 bbl and the ICE December Brent contract gained $0.77 to $59.87 bbl,
with both contracts trading at 1-1/2 week highs early Friday. NYMEX November
ULSD futures were up 2.4cts near $1.9448 gallon and the November RBOB contract
gained 0.61cts to $1.6294 gallon, a better than two-week high on the spot
Overnight reports indicate an Iranian oil tanker was hit by two rockets
Friday morning off the coast of Saudi Arabia, heightening tensions in the heart
of the world's oil producing region. The National Iranian Tanker Company said
in a statement the vessel sustained two separate explosions about 60 miles off
the Saudi port of Jeddah.
The attack comes less than a month after a massive offensive on Saudi oil
infrastructure at the Abqaiq oil processing facility and Khurais oil field,
knocking off half of the kingdom's oil production. Security analysts expect
another spike in regional rivalries following today's incident, ensuring
geopolitical standoff in the Middle East.
Saudi Arabia has not issued a statement following the tanker attack, with
the situation fluid.
International Energy Agency echoed this sentiment in its latest monthly Oil
Market Report, saying "...intuitively, the precision attacks on Saudi Arabia
and the possibility of a repeat should keep the market on edge. There should be
talk of a geopolitical premium on top of oil prices."
IEA's report was prepared ahead of the latest tanker attack, with the
Paris-based agency having said, "For now, though, there is little sign of this
with security fears having been overtaken by weaker demand growth and the
prospect of a wave of new oil production coming on stream."
In financial markets, U.S. equities were solidly higher this morning after
U.S. President Donald Trump reassured investors that U.S.-China trade talks are
"go[ing] really well," and he was to meet China's Vice Premier Liu He at the
White House later today.
According to reports, both sides have agreed on the bilateral accord to
prevent currency manipulation. Prior to the talks, the White House also
approved licenses for American companies to do business with blacklisted
Chinese telecom giant Huawei Technologies Co., a move seen as an effort to
improve the environment for the talks.
Around 7:30 AM ET, Dow Jones Industrial futures pointed to 300 points rise
at the market open, while S&P and NASDAQ were also higher.
Liubov Georges, 1.646.359.4088, firstname.lastname@example.org, www.dtn.com. (c)
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