Oil slips on China’s plan to release crude from reserves, problems with airline demand

MELBOURNE, Sept. 10 (Reuters) – Oil prices fell on Friday, heading for weekly losses of nearly 2%, after China said it would release oil from its strategic reserve and some U.S. airlines , the key to a recovery in jet fuel demand, warned of slowing ticket sales.

US West Texas Intermediate (WTI) crude futures fell 8 cents, or 0.1%, to $ 68.06 a barrel at 0133 GMT, after falling 1.7% on Thursday. Brent crude futures fell 12 cents, or 0.2%, to $ 71.33 a barrel, extending a 1.6% decline from Thursday.

Both settled to their lowest level since August 26 on Thursday.

China’s state reserves administration on Thursday said it would release crude oil reserves into the market through public auctions to ease the pressure of high raw material costs on domestic refiners, a move that was described as a first. Read more

An analyst said the release of the reserve came as the Chinese majors had to replace supplies they had purchased for September and October loadings from Shell in the Gulf of Mexico in the United States.

Royal Dutch Shell Plc (RDSa.L), the largest Gulf of Mexico oil producer in the United States, has canceled some export shipments due to Ida’s damage to offshore facilities.

Nearly 1.4 million barrels per day (bpd) of offshore oil production remains stranded in the Gulf of Mexico and 1 million bpd of refining capacity is also still offline. Read more

“This was also not good news on the demand front, with US airlines warning of slowing demand,” ANZ Research analysts said in a note.

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 slowed and lowered forecasts in revenue due to increase in COVID-19 cases threaten to block travel resumption. Read more

Reporting by Sonali Paul; Editing by Himani Sarkar

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