Oil futures settled mixed Thursday with U.S. crude prices rising and international benchmark Brent slightly lower as traders weighed a weaker global demand outlook and signs of recovering Middle East crude supplies against persistent shipping risks around the Strait of Hormuz.
December Brent crude futures slipped 0.1% to $105.92 a barrel, while West Texas Intermediate for December delivery rose 2.8% to $96.50 a barrel.
The U.S. benchmark was buoyed by a large and unexpected draw in U.S. crude stockpiles for last week, and reports that the Trump administration is considering easing some sanctions on shadow fleets to increase tanker supply and lower the cost of moving crude.
"This is more negative for Brent than for WTI," Price Futures Group senior market analyst Phil Flynn said in a note. "The elevated freight rates have been a major reason the Brent premium has stayed so wide. Any relief on tanker availability hits that premium directly."
The U.S. Energy Information Administration reported an 8.6 million barrel withdrawal from U.S. commercial crude inventories last week, against expectations of a small stock build in a Wall Street Journal survey of analysts. U.S. crude production fell by 300,000 barrels a day as Hurricane Isaias shut in some offshore production in the Gulf of Mexico, which the U.S. calls the Gulf of America, while crude imports fell by 791,000 barrels a day.
"The big stock decline may also be viewed as a one-off since all the decline developed within the Gulf coast region that was apparently affected more by Hurricane Isaias than widely expected," trading advisory firm Ritterbusch & Associates said in a note.
Demand concerns are weighing on oil prices even as the conflict between Saudi Arabia and Yemen's Iran-backed Houthi militia continues to sustain a geopolitical risk premium, MUFG said in a note Thursday. The bank said shipping through the Strait of Hormuz remains under threat following the sinking of two vessels.
Shipping risks remained high after two Emirati cargo ships sank near the Strait of Hormuz following attacks, The Wall Street Journal reported Wednesday. Maritime security firms confirmed the losses, marking the first such incidents in months.
U.K. Maritime Trade Operations separately issued warnings Wednesday about two container ships struck by unidentified projectiles while traveling across the Strait of Hormuz.
Despite the continuing risks, Middle East crude exports have recovered substantially. The International Energy Agency said Wednesday that Persian Gulf crude shipments rose by 4.4 million barrels a day to 13.9 million barrels a day in September, reaching more than 75% of prewar levels. Global oil supply increased by 2.5 million barrels a day to 102.3 million barrels a day, driven by Gulf producers.
However, the recovery remains vulnerable to renewed attacks on energy infrastructure and shipping, the agency said.