Oil prices recorded a limited gain of 2% during the week ending Sept. 10 amid mixed messages over demand, as a huge drop in US fuel stock signaled higher oil demand, although Saudi Arabia’s price cut for its Asian customers questioned the extent of the demand recovery.
International benchmark Brent crude traded at $72.75 at 1654 GMT on Friday, posting more than a 2.26% gain from Monday when trade at 0654 GMT registered at $71.14 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $69.44 at the same time on Friday, increasing over 1.41% relative to $68.47 a barrel on Monday.
Oil prices started the week on a bearish sentiment after state oil giant Saudi Aramco announced Sunday that it would lower the price of Arab Light crude for its Asian customers by $1.30 in October. The largest monthly reduction in a year indicated falling demand in the region and weighed on prices.
The Saudi move was prompted by lockdowns across Asia to combat the highly infectious delta coronavirus variant, which has slowed oil consumption in the region.
Exerting downward pressure on prices, China on Thursday announced its decision to release crude oil reserves to the market via public auction.
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 the current oil production and 77.2% of the natural gas production in the Gulf of Mexico have been shut in.
A strong rebound in China’s imports and exports in August, despite disruptions caused by the spread of the coronavirus delta variant, also lent support to the upward price trend.
Exports in August rose by 25.6% over a year earlier to $294.3 billion, up from an 18.9% increase in July, customs data showed Tuesday. Imports in August also rose by 33.1% to $236 billion, up from 28.7% in July.
Although the rise in the coronavirus cases continues fueling investor demand fears, a surprise decrease in gasoline inventories in the world’s largest oil consumer, the US, raised investors’ hopes for 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.
By Sibel Morrow