Brent and WTI crude pulled back Wednesday after a near-5% rally the day before, as traders weighed fresh US-Iran military strikes against a barrage of new supply threats near the Strait of Hormuz. Two Saudi supertankers were hit by unidentified projectiles in the strait, while US crude stockpiles fell and Iranian exports stayed severely curtailed.
Brent crude futures for November slipped 0.2% to $94.48 a barrel on Wednesday. West Texas Intermediate fell 0.8% to $89.49 a barrel. Brent had climbed as high as $97.04 a barrel earlier in the session. Both benchmarks jumped nearly 5% in the previous session to their highest levels in about five weeks.
US and Iran trade fresh strikes
The United States launched a fresh barrage of airstrikes against Iranian targets overnight, prompting retaliatory missile and drone attacks by Tehran against US forces in Jordan and Bahrain. The escalation ranked among the most serious exchanges between the two countries in weeks, deepening concern that the conflict could restrict tanker movements through the Strait of Hormuz.
Risks intensified after two supertankers carrying Saudi crude were hit by unidentified projectiles while passing through the strait on Monday. The vessels had each loaded about 2 million barrels at Saudi Arabia's Juaymah terminal. According to ING analysts: "rising tensions clearly put crossings at risk".
Inventories drop as Iranian exports stay curtailed
According to the American Petroleum Institute, US crude oil inventories fell by 2.6 million barrels in the week ended Aug. 28. That reversed a 4.2 million-barrel increase the previous week. Gasoline stocks rose by about 300,000 barrels, while distillate stocks fell by roughly 300,000 barrels.
Iranian crude exports have also been severely curtailed. Reuters reported that Iranian crude loadings fell to between 220,000 and 255,000 barrels per day in August, down from about 2 million bpd in March.
Brent eyes the $100 barrier
Brent's Tuesday rally marked its biggest one-day gain since July 23. The move broke above the 100-day moving average at $91.21, clearing the Fibonacci 61.8% retracement at $92.85. Wednesday's crack of the Fibonacci 76.4% level at $96.34 keeps the near-term outlook bullish, though overbought conditions suggest bulls may pause for consolidation. Dips that hold above $92.85 would keep the path open toward the psychological $100 barrier.
Sources: Commodities & Futures News, ActionForex
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