Crude Oil Recovers From Early Pullback To Edge Modestly Higher

(RTTNews) - Crude oil initially gave back ground following a two-day surge on profit taking but has rebounded over the course of the session amid the possibility of Russian oil exports being hit by sanctions by the US and the West.

WTI Crude Oil for November delivery was last seen trading up by $0.08 (or 0.12%) at $65.07 per barrel after hitting a low of $64.06 a barrel.

After addressing the UN General Assembly in New York on Tuesday and later having a discussion with Ukrainian President Volodymyr Zelenskyy, US President Donald Trump suggested Ukraine could get back all of Ukraine in its original form. Trump's comments led to speculation that US may offer additional military support to Ukraine.

With the Russia-Ukraine war intensifying day by day, Ukraine has been targeting oil refineries in Russia. In retaliation, Russia has stepped up its frequency of drone attacks.

Traders feel that sanctions on Russian oil exports by the US and the West or direct military support by the US could lead to a supply side disruption.

Meanwhile, after last week's rate cut by the Federal Reserve, analysts were pricing in two additional cuts this year and another next year. However, today's jobs and economic data from the US were not supportive of lowering of borrowing rates.

As a result, traders initially opted profit-taking following the sharp upward move seen over the two previous sessions.

On the US inventory front, data released by the Energy Information Administration yesterday revealed that for the week ending September 19, crude oil inventories fell by 0.6 million barrels, gasoline stocks decreased by 1.1 million barrels, and distillate stocks (including home heating oil and diesel) dropped by 1.7 million barrels.

Oversupply concerns have surfaced as Iraq plans to resume crude oil exports this week from its semi-autonomous region of Kurdistan via a pipeline to Turkey.

While eight oil companies that have operating fields in the northern Iraqi region of Kurdistan have arrived at an agreement with the Iraqi central government and the Kurdistan Regional Government, two companies; DNO ASA - a Norwegian company - and British Genel Energy, have refused to sign a deal until the Kurdistan Regional Government provides guarantees that they will receive the money it owes them.

Iraq says that initially about 230,000 bpd will be exported from Kurdistan, and the volume could go higher up to 500,000 bpd with new investments to increase production.

Traders are concerned that with the end of peak summer demand season, additional supplies from Kurdistan could result in flooding the market with surplus oil.

The September 9 aerial attacks on Doha by Israeli Defense Forces targeting Hamas have received widespread condemnation from Arab and a few western nations. However, Israeli PM Benjamin Netanyahu has warned of more such attacks in their endeavor to eliminate Hamas militants "wherever they are".

In response to repeated Houthi missile and drone attacks on Israel, today the IDF confirmed carrying out a wave of aerial strikes against Houthi targets in Sanaa, Yemen.