Oil ends higher after drone attack on Saudi production field

Crude extends gains as stocks rally

Oil futures ended solidly higher Monday. Crude found initial support after Yemen's Houthi rebels launched a drone attack over the weekend on one of Saudi Arabia's largest oil fields, then built on gains as U.S. stocks continued their rebound from last week's Wednesday rout.

West Texas Intermediate crude for October delivery , the most active contract, rose $1.33, or 2.4%, to end at $56.14 a barrel. The front-month September contract rose $1.34 to end at $56.21 a barrel. October Brent rose $1.10, or 1.9%, to close at $59.74 a barrel.

The Houthis on Saturday said they targeted the Shaybah oil field, which is owned by Saudi Arabian Oil Co., or Aramco, and holds about 14 billion barrels of oil, according to The Wall Street Journal (https://www.wsj.com/articles/iran- aligned-houthis-strike-major-saudi-oilfield-11566043672?mod=mktw). Aramco said a fire was extinguished at a natural-gas processing plant and that there were no injuries and no disruptions to production at the field, which produces around 1 million barrels of oil a day.

"Though oil production there has not been affected, this nonetheless puts the spotlight once again on the supply risks in the Middle East," said Cartsen Fritsch, analyst at Commerzbank, in a note.

Gains were extended as stocks posted strong gains (http://www.marketwatch.com/story/us-stock-futures-rise-on-global- stimulus-talk-trade-optimism-2019-08-19), buoyed by encouraging comments from President Donald Trump and other officials on trade talks, along with a move by China over the weekend to lower borrowing costs for companies. Also, German Finance Minister Olaf Scholz said Berlin could come up with fiscal stimulus if needed, as Europe's largest economy threatens to tip into recession.

Volatile global financial markets, including a sharp stock-market selloff Wednesday following an inversion of the main measure of the U.S. yield curve (http://www.marketwatch.com/story/5-things-investors-need-to-know-about-an-inverted- yield-curve-2019-08-14), reflected growing anxiety about the global economic outlook and, for oil traders, underlined worries about demand.

See:Stock-market investors rattled by bond market's 'warning shot' -- here's what's next (http://www.marketwatch.com/ story/stock-market-investors-rattled-by-bond-markets-recession-warning-heres-whats-next-2019-08-17)

Oil saw whipsaw trading action last week but booked weekly gains (http://www.marketwatch.com/story/oil-on-track-for- weekly-gain-but-trims-rise-after-downbeat-opec-outlook-2019-08-16). WTI remains down around 4% so far in August, however, while Brent is down around 8.3%.

In other energy trading, September gasoline rose 0.76 cent, or 0.5%, to close at $1.6644 a gallon, while September heating oil rose 2.03 cents, or 1.1%, to finish at $1.8331 a gallon.

September natural-gas futures rose 1 cent to $2.21 per million British thermal units, a gain of 0.5%.

-William Watts; 415-439-6400; AskNewswires@dowjones.com


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  08-19-19 1610ET
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