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 US airlines, key to a recovery in jet fuel demand, warned of a slowdown in ticket sales here.
US 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. Brent crude 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 August 26 on Thursday.
China’s state reserves administration said on Thursday it would release crude oil reserves here 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 in the US Gulf of Mexico.
Royal Dutch Shell Plc, the largest oil producer in the US Gulf of Mexico, has cancelled some export cargoes here due to Ida’s damage to offshore facilities.
Almost 1.4 million barrels per day (bpd) of offshore oil production remains shut here 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, United Airlines Holdings Inc, Delta Air, Southwest Airlines Co and JetBlue Airways said ticket sales had slowed and cut revenue forecasts as a surge in COVID-19 cases threatens to stall a recovery in travel.