Oil Prices Set to Rise Again... Inventories "Plunge" Amid War Fears [Weekend Money]

U.S. Crude Inventories Fall by 8.6 Million Barrels
Production and Imports Decline as Refinery Demand Rises
Markets on Edge as U.S. Weighs Attacks on Iran After Midterm Elections

Alarming signals are emerging from U.S. crude oil storage tanks. Production fell in the wake of a hurricane, and imports also declined, yet refineries were using more crude oil. As shrinking inventories compounded supply concerns, U.S. crude prices once again neared $100 a barrel. With concerns that U.S. President Donald Trump could attack Iran after the midterm elections also mounting, anxiety over oil prices is spreading again.

On October 15 (local time), November West Texas Intermediate (WTI) crude futures rose 3% to $97.97 a barrel on the New York Mercantile Exchange. By comparison, December Brent crude futures fell 0.1% to $105.92, leading analysts to say that gains were more pronounced in WTI, which is more heavily influenced by shifts in U.S. supply and demand.

The key factor driving prices higher was U.S. inventories. Commercial crude oil inventories fell by 8.6 million barrels last week, far exceeding the market's expected decline of 290,000 barrels. Inventory levels also fell to about 3% below the average for the past five years. With stocks in storage running down faster than expected, the market grew more concerned about the available supply cushion.

Behind the figures was Hurricane Isaias. Due in part to disruptions to production in the Gulf of Mexico, U.S. crude oil production fell by about 300,000 barrels per day from the previous week to 13.7 million barrels per day. Crude oil imports also declined by 790,000 barrels per day. Meanwhile, refineries increased the amount of crude they processed. With less oil coming in and more being used for processing, refineries drew on inventories to make up the shortfall.

Even as refineries ran at a brisk pace, fuel inventories did not build up. The refinery utilization rate rose by 0.8 percentage points from the previous week to 93.5%, but inventories of distillates, including diesel, fell by 2.5 million barrels. Kim Gwang-rae, a senior researcher at Samsung Futures, said, "This trend supports strong demand from refineries for crude oil."

More troubling news continued to emerge from the Middle East. Yemen's Houthi rebels attacked the presidential palace in the southern city of Aden with missiles, and clashes involving Saudi Arabia have also intensified. The possibility that the conflict could spread to energy facilities or oil shipping routes remains a risk for the market.

In addition, the United States' consideration of further attacks on Iran is expected to become a new "bombshell." According to major foreign media outlets, the U.S. military has drawn up operational plans in case President Trump orders a resumption of attacks. The plans include the possible use of a massive non-nuclear bomb known as the "Mother of All Bombs." However, researcher Kim questioned whether the bomb would actually be used. "The bomb could cause widespread damage, raising concerns about civilian casualties," he said. "It is also unclear whether it could strike Iran's key nuclear facilities, which are located in granite formations and deep underground."

This content was produced with the assistance of AI translation services.