U.S. crude oil edged lower on Wednesday after selling off steeply in the previous session.
The rally spurred by the risk of a wider Middle East war has stalled out amid uncertainty over how Israel will retaliate against Iran for last week’s ballistic missile strike. Chinese policymakers’ failure to deliver new economic stimulus measures at a press briefing this week also held energy prices in check.
President Joe Biden spoke with Israel Prime Minister Benjamin Netanyahu Wednesday morning as a strike against Iran looms. Israel Defense Minister Yoav Gallant said Israel’s strike will be “lethal, precise and especially surprising,” according to Israeli media.
Here are Wednesday’s closing energy prices:
- West Texas Intermediate November contract: $73.24 per barrel, down 33 cents, or 0.45%. Year to date, U.S. crude oil has gained more than 2%.
- Brent December contract: $76.58 per barrel, down 60 cents, or 0.78%. Year to date, the global benchmark is little changed.
- RBOB Gasoline November contract: $2.0664 per gallon, little changed. Year to date, gasoline has fallen more than 1%.
- Natural Gas November contract: $2.66 per thousand cubic feet, down 2.67%. Year to date, gas is ahead more than 5%.
Crude oil sold off more than 4% on Tuesday. Downside risk is elevated as the rally got “out over its skis,” Ryan Grabinski, managing director and investment strategist at Strategas, told clients in a Wednesday note.
“From here, durable forms of supply disruption need to occur to see further advances for energy,” Grabinski said.
Though prices are falling, Goldman Sachs sees global benchmark Brent jumping by $10 to $20 per barrel if an Israeli strike disrupts Iranian crude oil production, according to a Tuesday research note.
U.S. crude inventories rose by 5.8 million barrels for the week ended Oct. 4 while gasoline stockpiles fell by 6.3 million barrels, according to the Energy Information Administration.