Oil Tops $110 as Middle East Supply Fears Persist Despite Rising Flows

Brent crude traded at $110.30 a barrel and West Texas Intermediate at $99.12, both up more than 1% from Tuesday, as traders weighed persistent Middle East supply concerns against signs of recovering flows and a possible diplomatic deal. A U.S. inventory report showing another sizable draw last week added to bullish sentiment, even after a Wall Street Journal report said Middle East oil flows topped pre-war levels in the week to October 18, averaging 24 million barrels a day. Kpler data cited by the Journal put Hormuz flows at 14 million barrels daily, while a separate Reuters report cited Kpler estimating Hormuz at 8.5 million barrels a day amid intensified Iranian attacks. DBS analyst Suvro Sarkar attributed the move to a mix of profit-taking, "optimistic hopes of a Qatar- or Pakistan-brokered deal" tempered by the view that any deal remains "very distant," plus API data showing continued U.S. crude and product drawdowns. Record Persian Gulf freight rates, driven by less efficient tanker use tied to ship-to-ship transfers in the Gulf of Oman, are compounding price pressure, ING strategists said.