[ad_1]
Oil prices rose to narrow the first weekly drop in three weeks, as investors assessed China’s claim it freed crude oil from its strategic reserves in an unprecedented intervention in the global market .
New York’s West Texas Intermediate crude futures traded above $ 69 a barrel, up 1.8% on Friday, after losing 1.7% in the previous session. Brent crude oil is trading above $ 72.
Beijing has drawn on its giant reserves to “relieve the pressure caused by rising commodity prices,” according to an announcement from the National Food and Strategic Reserves Administration.
China’s move, which could happen again, adds another degree of uncertainty to the global oil market, which still struggles with the impact of the rapidly spreading delta variable of the coronavirus in many regions. The world’s largest importer of crude saw a sharp acceleration in producer price inflation last month amid rising energy and metals prices.
The Chinese agency also said that “the natural rotation of crude oil inventories is an important way to balance the market,” noting that it may continue to release more barrels.
She added that bringing reserves to market through open auctions “will better stabilize supply and demand in the local market.”
Some analysts see the move as a prelude to a subsequent increase in purchases to make up for depleted stocks. Analysis firm Oilytics said in a report that the release of reserves “for the first time can be seen as a bullish indicator as it braces for higher demand in the fourth quarter.”
She noted that the stocks “may need to be replaced”.
On the other hand, US crude inventories fell last week as production fell the largest drop on record due to disruption from Hurricane Ida.
Inventories fell by 1.53 million barrels, according to the Energy Information Administration. The devastating storm resulted in a 1.5 million barrels drop in daily crude oil production.
Source link
