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Oil Rises Amid Doubts Over Speed of Saudi Recovery From Attacks

Oil rose amid doubts over the speed of Saudi Arabia’s recovery from the weekend’s attack on its facilities that knocked out a large chunk of its production.

Futures gained 1.7% in New York after paring around half of Monday’s 15% surge over the past two days. The Saudis are scouring global markets for fuels and picking up one-time supplies in the wake of the attacks, people familiar said. The kingdom also asked Iraq for as much as 20 million barrels of crude to supply its domestic refineries, Dow Jones reported, though officials on both sides denied the report.

The market remains on edge even though Saudi Arabia has said it will honor its export commitments and quickly restore production. There are also concerns that hostilities may flare again in the Middle East as Saudi Arabia said Iran unquestionably sponsored the strikes and U.S. President Donald Trump plans to add “some very significant sanctions” on the Persian nation this week.

“It’s an exaggeration that calm has been restored in the oil market” despite Saudi Arabia’s assurances on supply, said Tamas Varga, an analyst at PVM Oil Associates Ltd.

See also: Weakened Iran Shows It Can Still Hold the Global Economy Hostage

West Texas Intermediate crude for October delivery rose 96 cents to $59.07 a barrel on the New York Mercantile Exchange as of 9 a.m. local time. It dropped 2.1% on Wednesday following Tuesday’s 5.7% decline.

Brent for November settlement added $1.36 to $64.96 a barrel on the ICE Futures Europe Exchange after falling 1.5% on Wednesday. The global benchmark crude traded at a $6.02 premium to WTI for the same month.

One-Time Cargoes

Aramco Trading Co., which buys and sells fuels on behalf of the state oil company, purchased diesel cargoes and also sought one-time supplies of aviation fuel this week, according to people involved in those markets. Fuel oil, which can be used instead of crude for power generation, has also been bought.

Aramco is trading crude produced outside the country as normal and is not currently seeking to buy additional barrels from Iraq’s state oil marketer, other people with knowledge of the companies’ operations said.

The oil market is currently adequately supplied and there’s also no need to release emergency stockpiles, International Energy Agency Executive Director Fatih Birol said on Wednesday. The global oil market has enough resources to balance a large supply outage without requiring a strategic petroleum reserve release by developed nations, Goldman Sachs Group Inc. said in a note.

An Energy Information Administration report showed U.S. oil inventories rose by 1.06 million barrels last week. That was almost double what the American Petroleum Institute reported Tuesday and compared with analyst forecasts for a 2.25 million barrel decline. Gasoline stockpiles increased 781,000 barrels, while distillate supplies climbed 437,000 barrels, the EIA said.

Source: Bloomberg

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