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 
continuous chart. 

   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, liubov.georges@dtn.com, www.dtn.com. (c) 
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