Oil Prices Rebound Amid Tight Supply Outlook and Geopolitical Risks
The oil market has seen a rebound in WTI prices following a tight supply outlook due to geopolitical risks. Brent crude broke out, while natural gas is struggling to hold above $2.86 per million British thermal units (MMBtu). The US Energy Information Administration's (EIA) latest report shows that US crude inventories rose marginally in the week ended September 25, but distillate inventories fell by 2.3 million barrels. Refinery utilization fell to 92.5%, with a significant drawdown in middle distillates due to strained diesel availability following disruptions at Middle East and Russian refineries.
The US is trying to enlist European allies to release emergency diesel reserves, while discussions are underway about restricting US diesel exports. This exposes the US energy complex to potential supply disruptions despite relatively comfortable headline crude inventories.