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Oil Futures Surge on Tanker Attack, USD Slides to 3wks Low
10/11 7:28 AM
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,, (c) 2019 DTN. All rights reserved.