“With the oil market reassured that no material disruption to Saudi supply to its customers has occurred following the drone attacks on the Abqaiq processing facility, the oil price pursues its retreat from last week’s highs,” said Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA. “The oil market dodged a bullet, but there is no guarantee that another drone attack will not be repeated in the future.”
West Texas Intermediate for November delivery dropped $1.51, or 2.6%, to $55.78 a barrel on the New York Mercantile Exchange at 10:10 a.m. local time. Brent for the same month slipped $1.76, or 2.8%, to $61.34 a barrel on the ICE Futures Europe Exchange, and traded at a $5.58 premium to WTI.
Saudi Arabia is showing it’s starting to resolve the worst output disruption in its history. There had been speculation that it would take months to repair the extensive damage caused by the attacks. Aramco had said on Sept. 17 that it will restore its production capacity to 11 million barrels a day by the end of September, while the full level of 12 million will only be available in November.
There was other bearish news for oil. The American Petroleum Institute reported a 1.38 million-barrel increase in U.S. crude stockpiles last week, according to people familiar with the data. The group also reported a 2.27 million barrel increase at the Cushing, Oklahoma, hub. If confirmed by the U.S. government, this would be the first increase after 11 weeks of declines. Energy Information Administration will publish weekly petroleum data at 10:30 a.m. in Washington.
©2019 Bloomberg L.P.