By Sonali Paul
MELBOURNE (Reuters) – Oil prices dipped on Friday, heading for weekly losses of nearly 2%, after China announced it would release oil from it strategic reserve and some U.S. airlines, key to a recovery in jet fuel demand, warned of a slowdown in ticket sales https://www.reuters.com/business/aerospace-defense/united-airlines-warns-delta-variant-hit-revenue-capacity-2021-09-09.
U.S. West Texas Intermediate (WTI) crude futures fell 8 cents, or 0.1%, to $68.06 a barrel at 0133 GMT, after dropping 1.7% on Thursday. futures fell 12 cents, or 0.2%, to $71.33 a barrel, extending a 1.6% drop from Thursday.
Both settled at their lowest since Aug. 26 on Thursday.
China’s state reserves administration said on Thursday it would release reserves https://www.reuters.com/business/energy/china-release-state-crude-oil-reserves-first-time-2021-09-09 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.
An analyst said the release from the reserve came as Chinese majors had to replace supplies they had bought for September and October loadings from Shell (LON:) in the U.S. Gulf of Mexico.
Royal Dutch Shell Plc, the largest oil producer in the U.S. Gulf of Mexico, has cancelled some export cargoes https://www.reuters.com/business/energy/shell-declares-force-majeure-some-oil-deliveries-after-hurricane-ida-2021-09-09 due to Ida’s damage to offshore facilities.
Almost 1.4 million barrels per day (bpd) of offshore oil production remains shut https://www.reuters.com/business/energy/three-quarters-us-gulf-mexico-oil-output-remains-shut-2021-09-08 in the Gulf of Mexico and 1 million bpd of refining capacity is also still offline.
“It wasn’t good news on the demand front either, with U.S. airlines warning of slowing demand,” ANZ Research analysts said in a note.
American Airlines (NASDAQ:), United Airlines Holdings (NASDAQ:) Inc, Delta Air, Southwest Airlines (NYSE:) Co and JetBlue Airways (NASDAQ:) said ticket sales had slowed and cut revenue forecasts as a surge in COVID-19 cases threatens to stall a recovery in travel.
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