Market News and Commentary – Wall Street Underground

By Nick Guarino | September 17, 2019

Oil Jumps In Record Trading After Attack On Saudi Facilities

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NEW YORK (Reuters) – Oil ended nearly 15% higher on Monday, with Brent logging its biggest jump in over 30 years amid record trading volumes, after an attack on Saudi Arabian crude facilities cut the kingdom’s production in half and fanned fears of retaliation in the Middle East.

The attack heightened uncertainty in a market that had become relatively subdued in recent months and now faces the loss of crude from Saudi Arabia, traditionally the world’s supplier of last resort. A gauge of oil-market volatility hit its highest level since December of last year, and trading activity showed investors expect higher prices in coming months. “The attack on Saudi oil infrastructure came as a shock and a surprise,” said Tony Headrick, an energy market analyst at St. Paul, Minnesota, commodity brokerage CHS Hedging LLC. “I think the tables abruptly shifted in the way of the supply outlook and caught many who were short off-guard.” Two sources briefed on Aramco’s operations said a full return to normal production “may take months.” “I don’t think there really is enough to offset what is going to be offline here for a period of time, and you don’t even know the quantity of time,” said Joe McMonigle, energy analyst at Hedgeye Research.

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