Oil futures settle lower as supply optimism outweighs risks

By Farhan Rafid and Anthony Harrup Oil futures gave up early gains and settled lower Wednesday as traders looked past fresh Houthi attacks in Saudi Arabia and production shut-ins off the U.S. Gulf coast and focused on continuing oil flows out of the Middle East. Brent crude for December delivery settled down 0.4% at $100.20 a barrel after rising to as high as $102.59. West Texas Intermediate crude for November delivery fell 1.3% to $88.28 a barrel. Futures have declined in three of the past four sessions on optimism about the amount of oil that is making it out of the Persian Gulf despite the conflict remaining unresolved. "I think people are looking at the markets with a positive lens and the expectation is that we're getting close to 90% of flows through the Strait of Hormuz," said Chris Cook, a research analyst at Frost Investment Advisors. "If it wasn't for the fuel costs for the transportation and the insurance that's getting tacked on, we'd probably be in a much lower price environment right now." Saudi Arabia's General Authority of Civil Aviation said Tuesday that King Abdullah bin Abdulaziz International Airport in Jazan and Najran International Airport were damaged in attacks. Early Wednesday, a Houthi missile targeting an area north of Riyadh was intercepted and destroyed, according to a spokesperson for the Saudi-led coalition. An attack also targeted Aden International Airport in Yemen, where authorities said two Houthi missiles struck the civilian facility without causing injuries, The Wall Street Journal reported. The Saudi-led coalition separately said Tuesday that it destroyed a ballistic-missile launch platform in Sana'a and a storage facility at a mountainous site in Saada containing 20 ballistic missiles, according to the Saudi Press Agency. Shipping risks around the Strait of Hormuz also remain elevated. An attack Tuesday wounded 12 mariners aboard the Panama-flagged commercial vessel MT On Peace, including 11 Indian nationals, India's foreign ministry said. Tropical Storm Isaias formed in the Gulf of Mexico and is expected to reach the U.S. Gulf coast between Mississippi and Alabama late Friday as a hurricane, according to the National Hurricane Center. The U.S. Marine Minerals Administration said Wednesday that eight platforms and two rigs had been evacuated, with 511,619 barrels a day of oil and 350 million cubic feet a day of natural gas production shut in. The U.S. Energy Information Administration said Wednesday that U.S. commercial crude oil inventories fell by 3.2 million barrels last week to 424.1 million barrels, and were about 1% above the five-year average for the time of year. The market had expected a third consecutive weekly inventory build. On Tuesday, the EIA estimated that Middle East oil exports increased in September from August despite continued attacks, while crude-production shut-ins fell to an average 4.8 million barrels a day from 5.8 million barrels a day in August and 10.9 million barrels