Supply Disruption Fears Fuel Crude Oil Price Increase
Crude oil prices saw an uptick on Thursday morning, driven by growing concerns about potential disruptions to global oil supply due to escalating tensions in the Middle East and the impact of Hurricane Milton on U.S. fuel supplies.
By 9:55 AM on Thursday, Brent crude oil futures for December were trading at $77.20, up by 0.81%. Meanwhile, November West Texas Intermediate (WTI) crude oil futures rose 0.72% to $73.77.
In India, October crude oil futures on the Multi Commodity Exchange (MCX) rose 1.42%, reaching ₹6206, up from ₹6119 on the previous day. November futures on the MCX also saw a 1.43% increase, trading at ₹6171 from the previous close of ₹6084.
Middle East Tensions Raise Supply Concerns
The recent missile attack launched by Iran on Israel has sparked fears of further escalation in West Asia, with Israel pledging retaliation. Israeli Defense Minister Yoav Gallant warned of a “lethal, precise and surprising” response to Iran, heightening concerns that any conflict could disrupt the region’s crucial oil supplies.
Iran is one of the world’s major oil producers, and any instability in the country could significantly affect global crude oil output, making market participants wary of potential disruptions.
U.S. Fuel Supply Strain from Hurricane Milton
In addition to geopolitical tensions, Hurricane Milton has been impacting fuel supplies in the U.S. The hurricane recently made landfall on Florida’s west coast, leading to shortages at fuel stations as gasoline demand spiked. This added strain on U.S. fuel supply helped support crude oil prices, as the market anticipates increased consumption of energy products in the affected regions.
U.S. Crude Oil Inventories and Limited Price Increases
Despite these concerns, the latest U.S. data on crude oil inventories limited further price increases. According to the U.S. Energy Information Administration (EIA), commercial crude oil inventories in the U.S. increased by 5.8 million barrels for the week ending October 4, reaching 422.7 million barrels. While this is a rise, U.S. crude oil inventories remain about 4% below the five-year average for this time of year.
The market had expected an increase of around 2 million barrels, making the larger-than-anticipated rise in stockpiles less of a price-supporting factor.
At the same time, motor gasoline inventories in the U.S. decreased by 6.3 million barrels, a decrease of 4% compared to the five-year average. This ongoing reduction in gasoline stocks indicates strong demand, adding pressure to prices.
Strong Demand for Gasoline and Other Commodities
The U.S. also saw an uptick in demand for gasoline, with total products supplied over the last four-week period averaging 20.6 million barrels per day—up 2.9% from the previous year. Specifically, gasoline product supplied averaged 9 million barrels per day, a notable 7.5% increase year-over-year.
In other commodities, October zinc futures on the MCX traded higher, reaching ₹278.10, up by 0.60% from ₹276.45 the previous day. Additionally, October guargum futures on the National Commodities and Derivatives Exchange (NCDEX) rose 0.91%, trading at ₹11065, while November dhaniya futures also saw a small increase of 0.13%, reaching ₹7460.
As tensions in the Middle East and extreme weather events continue to affect supply chains, crude oil and other commodities remain under heightened scrutiny in global markets.
Related topics:
