Markets
WTI Settled Above $100 for the First Time Since September as Brent Touched $110
US crude rose 3.51% to $101.41 on October 16 and 10.41% for the week after at least nine ships were attacked near the Strait of Hormuz since Sunday. Brent closed at $109.86, up 3.72%, and energy was the best-performing sector on a day the S&P 500 fell 1.09%.
Oil did on Friday what the stock market feared it would. West Texas Intermediate settled at $101.41 a barrel, up 3.51%, its first close above $100 since late September; Brent touched $110 during the session, its highest since May, and closed at $109.86, up 3.72%. For the week WTI gained 10.41% and Brent 4.91%, so the gap between the two benchmarks narrowed to about $8.50 from almost $13 a week earlier.
The pressure came from the Strait of Hormuz. At least nine tankers and cargo ships have been attacked there since Sunday, CNBC reported, and US Central Command said Iran sank the container ship GFS Pride on Wednesday. On Friday a crude tanker, the MT On Peace, was hit by a projectile and twelve crew members were injured, eleven of them Indian, according to India's foreign ministry. Shipments through the strait ran at 9.4 million barrels a day in the week to Wednesday, about 70% of the pre-war average, according to the data firm Kpler cited by CNBC.
A second front added to it. Ukraine said it would keep striking Russian refineries, which matters more for diesel than for crude, and members of the International Energy Agency agreed to accelerate the release of more than 20 million barrels of diesel from stocks. In the United States, the weekly inventory report showed a crude draw of 8.6 million barrels, linked to Gulf Coast disruptions after Hurricane Isaias.
Energy stocks were the only crowded trade that worked. The Energy Select Sector SPDR (XLE) rose 2.52% to $68.24, a 52-week closing high, and is up 4.86% on the week. Exxon Mobil gained 2.46% to $178.98 and Chevron 2.59% to $224.99; Occidental added 2.82% and the oil-services company SLB 2.34%. The United States Oil Fund (USO) rose 2.83%. Natural gas went the other way, with the UNG fund down 3.88%.
The macro link is direct. September's import prices, published the same morning, showed fuel costs up 34.5% from a year earlier, and gasoline accounted for more than half of September's CPI increase. Every dollar on crude now lands in the next inflation print, eleven days before a Fed meeting at which a second hike is a live possibility. Monday's open will show whether the weekend brought more attacks on shipping or a lull.