Oil was largely flat on Thursday after a Pentagon statement intensified concerns of a Middle East conflict disrupting supply, supporting prices, while new details connected to the impeachment inquiry into U.S. President Donald Trump weakened demand sentiment.
Brent crude LCOc1 futures settled at $62.74 a barrel, up 0.6%, or 35 cents. U.S. West Texas Intermediate (WTI) crude CLc1 settled at $56.41 a barrel, down 8 cents, after briefly turning positive following the Pentagon statement.
Crude futures pared losses late in the session after the U.S. Department of Defense said it would deploy radar systems, Patriot missiles and about two hundred personnel to bolster Saudi Arabia’s defenses after an attack on the kingdom’s oil facilities this month.
Details about the deployment clarify the Pentagon’s Friday announcement about U.S. plans to send more forces to Saudi Arabia after the Sept. 14 strike, which Washington has blamed on Iran.
“The complex saw a late session rally on reports that the U.S. was sending military equipment to Saudi Arabia with the headlines driving another dose of risk premium into the pricing structure,” said Jim Ritterbusch of Ritterbusch and Associates.
Oil took a hit earlier in the session after the U.S. House Intelligence Committee released a declassified version of a whistleblower report alleging Trump used his office to solicit interference in the 2020 presidential election from a foreign country.
“When the odds of impeachment go down, the market goes up. When the odds of impeachment go up, it goes down,” said Phil Flynn, an analyst with Price Futures Group in Chicago. “The market doesn’t like the prospect of impeachment – that’s going to be a negative for the U.S. economy, it’s going to be a negative on U.S.-China trade.”
Prices were also under pressure by the faster-than-expected recovery of Saudi output after the drone and missile strikes on two of its oil-processing plants, as well as a surprise 2.4 million-barrel build in U.S. crude inventories last week.
Saudi Arabia, the world’s top oil exporter, has restored its production capacity to 11.3 million barrels per day, sources briefed on state oil company Saudi Aramco’s operations told Reuters.
Comments by Trump on Wednesday, which signaled that a resolution to the U.S. trade dispute with China might be near, helped limit losses.
A day after delivering a stinging rebuke to China over its trade policies, Trump said Beijing wanted to make a deal and it “could happen sooner than you think.”
Trump and Japanese Prime Minister Shinzo Abe also signed a limited trade deal that would open Japanese markets to $7 billion of U.S. products annually.
Source: Reuters (Laila Kearney; Additional reporting by Noah Browning in London and Roslan Khasawneh in Singapore; Editing by Marguerita Choy and; Kirsten Donovan)