Oil recovers as tight U.S. supplies offset China reserves sales plan
Oil prices rose on Friday on growing signs of tightness in U.S. markets after Hurricane Ida hit offshore output, although benchmarks were heading for weekly losses of about 1% after China announced plans to sell crude from its strategic reserves.
Brent crude futures for November rose 44 cents, or 0.6%, to $71.89 a barrel by 0324 GMT. U.S. West Texas Intermediate (WTI) crude futures for October was at $68.49 a barrel, up 35 cents, or 0.5%.
Brent is headed for a second straight weekly loss.
Both contracts fell more than 1% to settle at their lowest since Aug. 26 on Thursday after China said it would release crude oil reserves to the market via public auction to ease the pressure of high feedstock costs on domestic refiners, in a move that was described as a first. read more
“While this sale likely weighed on China’s crude imports this summer, alongside depleted teapot import quotas, we expect limited further draws in China’s onshore crude inventories this year and a resumption of higher imports into year-end as demand picks up seasonally and following the recent COVID-19 outbreak,” Goldman Sachs analysts said in a note.
Energy Aspects analyst Liu Yuntao said the release from the reserve came as Chinese majors had to replace supplies they had bought for September and October loadings from Shell in the U.S. Gulf of Mexico.
To cushion the impact, the U.S. Energy Department said on Thursday it has approved a second loan of 1.5 million barrels of oil to Exxon Mobil Corp (XOM.N) from the Strategic Petroleum Reserve (SPR). read more
Still some U.S. airlines, key to a recovery in jet fuel demand, warned of a slowdown in ticket sales.
American Airlines (AAL.O), United Airlines Holdings Inc (UAL.O), Delta Air , Southwest Airlines Co (LUV.N) and JetBlue Airways (JBLU.O) said ticket sales had slowed and cut revenue forecasts as a surge in COVID-19 cases threatens to stall a recovery in travel. read more