Economy

Oil up over ongoing tight US supply, China's crude sales from reserves

China's first sale from its strategic reserves totals 4.43 million barrels

Ebru Sengul Cevrioglu   | 24.09.2021
Oil up over ongoing tight US supply, China's crude sales from reserves

IZMIR 

Oil prices increased on Friday over ongoing supply shortfalls after two powerful hurricanes hit the US Gulf of Mexico and after China's first public sale of state crude reserves.

International benchmark Brent crude was trading at $77.48 per barrel at 0609 GMT for a 0.29% rise after closing Thursday at $77.25 a barrel.

American benchmark West Texas Intermediate (WTI) was at $73.42 per barrel at the same time for a 0.16% increase after it ended the previous session at $73.30 a barrel.

Ongoing supply concerns and the prolonged output recovery after two storms hit oil production in the Gulf of Mexico continue to support prices.

With tight supply, US stockpiles fell to almost three-year lows, dropping by 3.5 million barrels, or 0.8%, to 414 million barrels during the week ending Sept. 17, compared to the market expectation of a 2.4 million-barrel draw.

Nonetheless, China's first public sale of state reserves on Friday is limiting price gains. International media outlets report that PetroChina and Hengli Petrochemical bought four cargoes of crude totaling 4.43 million barrels.

China’s National Food and Strategic Reserves Administration —which manages the country’s strategic material reserves—announced earlier in September that it would release 7.38 million barrels from its Strategic Petroleum Reserves (SPR) to ease the pressure of high feedstock costs on domestic refiners.

The barrels will be auctioned off in phases to a limited number of state-owned oil companies and integrated independent refineries, the first of which takes place on Sept. 24.

However, analysts told Anadolu Agency that China’s release of crude from its SPR would have little impact on global oil prices nor they said is it significant enough to make OPEC+ alter its supply policies.

China’s official confirmation last week had initially knocked $1 off Brent and West Texas Intermediate.

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