United States Oil Fund (NYSE:USO) shares are pulling back Tuesday after an early rally, as crude oil reversed course and fell more than 2% despite initial gains driven by Houthi attacks on Saudi facilities and reports of ships coming under fire in the Gulf.
- United States Oil Fund stock is falling. Where is USO stock headed?
Oil Hits Multi-Month Highs Earlier Tuesday
Oil prices rose Tuesday as traders built a geopolitical risk premium into crude. Brent futures spiked to $111.75 a barrel, the loftiest level since May, then slipped back, Reuters reported. USO has since turned lower, giving back its early advance.
U.S. crude gained as well. The November West Texas Intermediate contract, which expires Tuesday, hit $110, its best front-month level since April. Worries over instability in the region and risks to energy supply keep oil above $100 a barrel.
Saudi Arabia sits at the center of the latest scare. Yemen’s Houthis, who align with Iran, claimed Monday to have hit several Saudi targets. They named an Aramco site at Yanbu, the Shaybah oilfield and two airports: King Khalid International in Riyadh and Abha.
Saudi authorities have not yet confirmed any of it, and Reuters had no way to check the claims on its own.
Gulf shipping adds to the unease. Kpler, a shiptracking firm, cites reports of at least 18 vessel attacks in two weeks, a pace that props up the risk premium. Also Monday, Houthi fighters attacked a Yemeni government camp in Shabwa province used to train security forces, causing heavy casualties.
IEA Ready to Release More Emergency Oil
More news today includes the International Energy Agency signaling that it will coordinate extra emergency oil releases if member countries want them. IEA Executive Director Fatih Birol said Tuesday the agency is “ready to go” once governments decide the moment has come, Reuters reported.
Meanwhile, the IEA is moving diesel to market under existing plans meant to ease the price spike. Last week, it said it would speed up the release of crude and oil products that members pledged in March, including more than 20 million barrels of diesel.
Birol said the diesel barrels come first, with timing left to each country and to conditions in the market. He gave no schedule but said the agency is trying to bring deliveries forward.
USO Shares Are Slipping
USO Price Action: United States Oil shares were down 2.61% at $156.62 at the time of publication on Tuesday. The stock is trading near its 52-week high of $163.34, according to Benzinga Pro.
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