EIA raises Q4 Brent forecast to $105 a barrel

Oil futures climbed Wednesday as traders weighed fresh Houthi strikes on Saudi and Yemeni infrastructure against weather-driven shutdowns of U.S. Gulf production and a broader recovery in Middle East supplies.

Saudi Arabia’s General Authority of Civil Aviation said Tuesday that strikes hit King Abdullah bin Abdulaziz International Airport in Jazan and Najran International Airport, wounding three people. Early Wednesday, a Houthi missile targeting an area north of Riyadh was intercepted and destroyed, according to Saudi-led coalition spokesman Turki al-Maliki.

In Yemen, authorities said two Houthi missiles struck Aden International Airport, a civilian facility, without causing injuries, The Wall Street Journal reported. The Saudi-led coalition said Tuesday that it destroyed a ballistic-missile launch platform in Sana’a and a storage facility at a mountainous site in Saada containing 20 ballistic missiles, according to the Saudi Press Agency.

Shipping risks around the Strait of Hormuz also remained elevated. An attack Tuesday wounded 12 mariners aboard the Panama-flagged commercial vessel MT On Peace, including 11 Indian nationals, India’s foreign ministry said.

In the U.S. Gulf of Mexico, a developing storm curtailed some offshore production. The U.S. Marine Minerals Administration said 185,120 barrels a day of offshore crude production, or 9.2% of Gulf output, had been shut in as of Tuesday morning as operators prepared for the weather. No production platforms or drilling rigs had been evacuated at that point.

Despite the new attacks, Middle East oil supplies continued to recover, according to the U.S. Energy Information Administration. The agency said Tuesday that exports increased in September from August even as the attacks persisted. Crude-production shut-ins fell to an average of 4.8 million barrels a day in September, from 5.8 million barrels a day in August and 10.9 million barrels a day at their May peak.

The EIA raised its fourth-quarter Brent forecast to an average of $105 a barrel, $14 above its previous forecast, citing Middle East export constraints, high transportation costs, and declining inventories. The agency estimated global oil inventories fell by 1.9 million barrels a day in the third quarter and projected a further 700,000-barrel-a-day decline this quarter.