Oil rises as investors weigh supply threats

By Georgina McCartney

HOUSTON, Oct 7 (Reuters) - Oil prices rose on Wednesday, with Brent futures holding above $100 a barrel on supply concerns as investors weighed a surprise drop in US crude stocks, global war-driven bottlenecks, and a storm heading for US oil-producing regions. 

Brent crude futures were up $1.29, or 1.28%, to $101.87 a barrel at 10:52 a.m. ET (1452 GMT). US West Texas Intermediate (WTI) crude was up 22 cents, or 0.25%, to $89.66.

US crude stocks and distillate inventories fell while gasoline stocks rose last week, the Energy Information Administration said. [EIA/S]

Crude inventories fell by 3.2 million barrels to 424.1 million barrels in the week ended October 2, the EIA said, compared with analysts' expectations in a Reuters poll for a 1.7 million-barrel rise.

WAR RISKS TO SUPPLIES

Investors are not convinced that recent rises in supply and exports from the Middle East are sustainable, PVM analyst Tamas Varga said, adding prices also drew support from the approaching US storm and the continuing conflicts in the Middle East and Ukraine.

Yemen's Houthis attacked Aden international airport with missiles and drones, the country's transport ministry said, as fighting between the Iran-aligned group and Saudi-backed government forces intensified.

Washington's "requests and ideas" about Iran's nuclear programme are at odds with Tehran's demands, a senior Iranian official told Reuters when asked about US Vice President JD Vance's comment that Tehran must cut enrichment to end the war with Washington.

Ukraine struck two Russian oil facilities while Russia pounded Ukraine with waves of missiles and drones, killing at least 15 people, Ukrainian officials said.

Strikes on Russian energy infrastructure and the loss of Middle East refining runs have tightened fuel markets, Vitol CEO Russell Hardy said on Tuesday.

The International Energy Agency and European Union on Wednesday were discussing an oil and diesel stocks release proposed last week. Diplomats and analysts expect it to include volumes pledged in March.

On Friday, Group of Seven countries agreed to release 100 million barrels after President Donald Trump warned he might ban US diesel exports if they did not put more fuel into the market.

"The release of strategic oil reserves should help contain near-term price spikes by offsetting declines in commercial inventories. However, such releases provide only temporary relief, as they do not eliminate the underlying tightness in the global oil market," UBS analysts wrote.

STORM HEADS TOWARDS US PRODUCTION FACILITIES 

In the US, forecasters said on Tuesday that a storm forming in the Gulf of Mexico would become the first Atlantic hurricane of 2026 within two days and was likely to hit oil and gas facilities. 

The US Gulf of Mexico produced 2.05 million barrels per day of crude oil in September, according to the EIA, accounting for around 15% of the country's total production. 

KCM Trade chief analyst Tim Waterer said the storm was an "unwelcome complication for crude, raising the prospect of production and refining disruptions at a time when the market already has enough supply-side headaches".

(Reporting by Georgina McCartney in Houston, Robert Harvey in London and Jeslyn Lerh in SingaporeAdditional reporting by Helen Clark in PerthEditing by David Goodman and David Gregorio)