Oil up a third straight session as traders await Israel's response to Iranian attack

By Myra P. Saefong and William Watts

Ample OPEC+ spare capacity is preventing 'runaway' prices: Rystad Energy

Oil futures rose Thursday, looking to tally a third straight session gain as traders awaited Israel's response to a missile barrage earlier this week by Iran amid concerns of a wider Middle East conflict that could disrupt flows of crude from the region.

Price moves

-- West Texas Intermediate crude CL00 for November delivery CL.1 CLX24 rose $3.01, or 4.3%, to $73.11 a barrel on the New York Mercantile Exchange.

-- December Brent crude BRN00 BRNZ24, the global benchmark, was up $2.37, or 3.2%, at $76.27 a barrel on ICE Futures Europe. Brent and WTI both settled at two-week highs on Wednesday.

-- November gasoline RBX24 added 3.6% to $2.0582 a gallon, while November heating oil HOX24 rose 3.3% to $2.2543 a gallon.

-- Natural gas for November delivery NGX24 traded at $2.973 per million British thermal units, up 3%.

Market drivers

Crude prices have seen a sharp rise this week, rallying more than 6%, as investors turned their attention to the Middle East.

"The potential for supply disruptions - particularly, but not exclusively from Iran - increases as the fighting intensifies," Claudio Galimberti, chief economist at Rystad Energy, said in a note.

Still, traders and analysts see the response in oil prices as relatively restrained. While WTI and Brent have turned a bit higher year to date based on the front-month contracts, they remain sharply lower from where they were a year ago.

"OPEC+ still sits on unusually ample spare capacity, which is the result of successive production cuts over the past two years," Galimberti wrote. "This spare capacity is for now preventing runaway prices amid one of the deepest and most pervasive crises in the Middle East in the past four decades."

Commodities Corner: Oil shock? How OPEC+ could soften the blow if the Middle East conflict hits supply.

Over in the U.S., the recent unexpected rise in U.S. crude inventories has helped ease some concerns about supply, Antonio Ernesto Di Giacomo, senior market analyst at XS.com, said in market commentary.

On Wednesday, the Energy Information Administration reported that U.S. commercial crude inventories climbed 3.9 million barrels for the week that ended Sept. 27, marking the first weekly rise in three weeks. On average, analysts had expected no change to crude supplies, according to a survey conducted by S&P Global Commodity Insights.

Separately on Thursday, a report from the EIA showed that domestic natural-gas supplies in storage rose by 55 billion cubic feet last week. Analysts surveyed by S&P Global Commodity Insights had expected a 57 bcf increase, on average.

-Myra P. Saefong -William Watts

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10-03-24 1041ET

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