Oil approaches three-year high as China dips into reserves

Oil approaches three-year high as China dips into reserves
Supply disruption in the Gulf of Mexico could last for months. (Reuters)
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Updated 24 September 2021

Oil approaches three-year high as China dips into reserves

Oil approaches three-year high as China dips into reserves
  • Brent near its highest since October 2018
  • China makes first public sale of state crude

Oil prices rose on Friday, nearing a three-year high, and were headed for a third weekly gain amid continued US supply disruptions.

Brent crude advanced 0.3 percent to $77.45 at 4:38 p.m. Riyadh time, while WTI, the US benchmark, was 0.1 percent higher at $73.35.

This week’s upward momentum was barely interrupted by China’s first public sale of state crude reserves.

Ongoing disruptions in US Gulf Coast production following Hurricane Ida and other storms could last for months and have led to large inventory drawdowns in the US and globally.

US oil refiners looking to replace crude from the Gulf of Mexico have been turning to Iraqi and Canadian oil, while Asian buyers have been pursuing Middle Eastern and Russian grades, analysts and traders told Reuters.

Some OPEC+ members have struggled to raise output because of under-investment or delays to maintenance work during the pandemic.

Brent oil prices could hit $80 a barrel by the end of September, analysts at UBS said in a research note.

Gains were briefly interrupted by China’s first public sale of state oil reserves. State-owned PetroChina and private refiner and chemical producer Hengli Petrochemical bought four cargoes totalling about 4.43 million barrels, sources with direct knowledge of the auction told Reuters.

An energy crunch continued in Europe as some Shell gas stations ran out of fuel in the UK. A shortage of truck drivers forced BP to close some filling stations this week, sparking concern among some consumers that they would be unable to fill up.

Germany’s E.ON will take on customers from a Lower Saxony firm that has decided to quit gas sales as prices have tripled in Europe this year. Surging gas prices have hit consumers worldwide and have squeezed out a number of companies in Britain.