Oil prices increased on Friday over demand euphoria after US fuel inventories recorded massive decreases, however, China’s decision to release crude from its strategic reserves limited further price upticks.
International benchmark Brent crude was trading at $72.62 per barrel at 0716 GMT for a 1.63% increase after closing Thursday at $71.45 a barrel.
American benchmark West Texas Intermediate (WTI) was at $69.30 per barrel at the same time for a 1.70% rise after it ended the previous session at $68.14 a barrel.
The rise in the coronavirus cases continues fueling investor demand fears, however, a surprise decrease in gasoline inventories in the world’s largest oil consumer, the US, signals a demand recovery.
The Energy Information Administration (EIA) said the country’s gasoline inventories decreased by 7.2 million barrels to 220 million barrels last week.
Commercial crude oil inventories also dropped by 1.4 million barrels to 423.9 million barrels compared to the market expectation of a 3.9 million-barrel draw.
Nonetheless, China's decision to release crude oil reserves to the market via public auction limited further price increases.
The administration for China's state reserves said the move aims to ease the pressure of high feedstock costs on domestic refiners.
According to the latest data from China's National Bureau of Statistics, there are nine storage bases in the country with a total crude oil reserve capacity of 237.66 million barrels. Experts estimate that a maximum of 10-15 million barrels of crude oil will be sold in one lot via auction.
The decision of the world's second-largest oil importer, China, came after Royal Dutch Shell, the largest oil producer in the US Gulf of Mexico region, canceled some oil exports after Hurricane Ida hit the region and brought all oil production activities in the area to a halt.
According to the US Bureau of Safety and Environmental Enforcement, 76.5% of current oil production and 77.2% of natural gas production in the Gulf of Mexico has been shut in.
Also, a slowdown in the number of passengers and ticket sales in the aviation sector strengthened the negative market outlook, putting downward pressure on oil prices.
Some US airlines, such as American Airlines, United Airlines Holdings, Delta Air, Southwest Airlines and JetBlue Airways, pointed to the increase in Covid-19 cases, warning that this upward trend is negatively affecting the recovery in transportation and resulting in slow ticket sales.
By Sibel Morrow