LONDON – Oil prices fell on Sept 18, extending losses for a third straight session as easing concerns over Saudi supply disruptions outweighed anxiety about a widening of conflict across the Middle East.
Brent crude futures fell by US$1.65, or 1.6 per cent, to US$103.17 a barrel. US West Texas Intermediate futures were down 61 US cents, or 0.6 per cent, at US$101.30.
Benchmark Brent prices are on track for their first weekly loss in three, down 1.4 per cent.
Immediate concerns over supply tightness have been eased by a combination of Saudi Arabia loading more crude via Oman, a build in oil product inventories in the United States, Singapore and Europe, plus increased fuel exports from China, said PVM Oil Associates analyst Tamas Varga.
“While continuous pre-weekend profit-taking cannot be ruled out, the current fundamental outlook would not justify a prolonged fall below US$100 (a barrel) basis Brent,” Varga added.
Markets largely shrugged off concerns, even as Saudi Arabia and Yemen’s Iran-backed Houthis exchanged fresh strikes across their border on Sept 17, expanding the Middle East war front.
Prices climbed to close to four-month highs earlier in the week after sources said crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu had been suspended and Riyadh cancelled some deliveries to Europe after its East-West pipeline was damaged in an attack last week.
However, prices have cooled since following reports that Saudi Arabia was seeking to restore about half the capacity of its East-West oil pipeline within days.
Additionally, Chinese exports of refined oil products in August rose 12.7 per cent year-on-year, with jet fuel exports hitting a record high, customs data showed on Sept 18. China is expected to continue to ease export controls in September, enabling it to profit from higher overseas margins.
Refined product stocks grew by 3.7 million barrels last week, according to data in a Morgan Stanley note, driven by builds in the West and Singapore.
“The key question is whether physical flows can normalise and what the timeline could be. If we see a sustained improvement in Hormuz traffic, some of the geopolitical premium can unwind further,” said Priyanka Sachdeva, head of market insights at Phillip Nova.
Transporting oil through the region remains risky, however.
Four commodities vessels passed through the Strait of Hormuz in the Gulf on Sept 17, below the 10-day average of about 16, preliminary shipping data showed on Sept 18. Three liquefied natural gas vessels also reappeared outside the Strait of Hormuz on Sept 17, Kpler data showed.
The figures could change as some ships typically switch off their transponders during the voyage to avoid the risk of detection in the conflict zone.
The US and Iran have held no peace talks since the collapse of an interim agreement reached in June. The war will come up for discussion at the United Nations General Assembly next week, and an Iranian delegation will be able to attend, according to the US State Department. REUTERS
