Oil prices rose to match the first weekly decline in three weeks, as investors assessed China’s claim to have freed crude oil from its strategic reserves in an unprecedented intervention in the global market.
New York’s West Texas Intermediate crude futures traded at $ 69 a barrel on Friday, after losing 1.7% in the previous session. Brent crude is trading above $ 72.
Beijing drew on its gigantic reserves to “alleviate the pressure caused by rising material prices prime”, according to an announcement by the National Administration of Food and Strategic Reserves.
China’s move, which could recur, adds another degree of uncertainty to the global oil market, which is still battling the impact of the coronavirus delta variable in rapid spread in many regions. The world’s largest crude oil importer saw a sharp acceleration in producer price inflation last month due to rising energy and metal 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 could continue to release more barrels.
He added that putting reserves on the market through open auctions “will better stabilize supply and demand in the local market.”
On the other hand, U.S. crude oil inventories fell last week, with production falling by the largest amount ever due to the disruptions caused by Hurricane Ida.
According to the Energy Information Administration, inventories fell by 1.53 million barrels. The devastating storm led to a 1.5 million barrel drop in daily crude oil production.
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