SINGAPORE – Oil prices rose today on growing signs of tightness in US markets after Hurricane Ida hit offshore output, although benchmarks were heading for weekly losses of nearly 1% after China announced plans to sell crude from its strategic reserves.
Brent crude futures for November rose 63 cents, or 0.9%, to US$72.08 (RM298) a barrel by 0624 GMT. US West Texas Intermediate (WTI) crude futures for October was at US$68.65 a barrel, up 51 cents, or 0.8%.
Brent is headed for a second straight weekly loss.
Both contracts fell more than 1% yesterday to settle at their lowest since August 26 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.
Some analysts said the announcement had likely been made to confirm the sale of reserves in July and August.
“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 US Gulf of Mexico.
Royal Dutch Shell Plc, the largest oil producer in the US Gulf of Mexico, has cancelled some export cargoes due to Ida’s damage to offshore facilities.
Almost 1.4 million barrels per day (bpd) of offshore oil production remains shut in the Gulf of Mexico and one million bpd of refining capacity is also still offline.
To cushion the impact, the US Energy Department said yesterday it has approved a second loan of 1.5 million barrels of oil to Exxon Mobil Corp from the Strategic Petroleum Reserve (SPR).
On the demand side, some US airlines, key to a recovery in jet fuel markets, warned of a slowdown in ticket sales.
American Airlines, United Airlines Holdings Inc, Delta Air, Southwest Airlines Co and JetBlue Airways said ticket sales had slowed and cut revenue forecasts as a surge in Covid-19 cases threatens to stall a recovery in travel. – Reuters, September 10, 2021
