Investing.com – Crude prices fell nearly 2% on Thursday as top importer China announced plans to release oil reserves to reduce pressure on its refineries. A mixed reduction in inventories in the United States also contributed to the drop in oil.
For his part, Brent crude, which is listed in London and is the world benchmark for oil, stood at $ 7,145 per barrel, down 1.15 cents, or 1.6%.
The West Texas Intermediate, which is listed in New York and is the benchmark for US oil, stood at $ 68.14 per barrel, down $ 1.16, or 1.7%.
China’s state reserves administration said it would release crude reserves to the market in phases through public auction to ease the pressure of high costs on domestic refineries.
“The oil market is in deficit, but this story from China could interrupt its stay in deficit for the rest of the year,” analyst Ed Moya told the online trading platform OANDA.
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“WTI crude fundamentals were very bullish until the news from China to release its reserves. Selling momentum could accelerate and WTI could head to the $ 65 level. “
U.S. crude inventories hit four-week lows last week and were less than a third of expected levels, data from the Energy Information Administration (EIA) showed on Wednesday, as the closures of the refineries triggered by Hurricane Ida thwarted analysts’ projections. Crude reserves fell by 1.5 million barrels in the week through September 3, to 423.9 million barrels, the EIA said in its Weekly Oil Situation Report.
This is the smallest reduction in crude stocks in the United States since the week ending Aug. 6, according to historical EIA data.
Analysts polled by the US media expected a reduction of 4.75 million barrels.
As for gasoline, inventories fell 7.2 million barrels for the week to 220 million barrels, according to the EIA, versus analysts’ expectations of a 3.3 million barrel drop. This is another storm-related anomaly, as the inability of refineries to operate at optimal levels since the August 29 hurricane caused motor fuel reserves to replenish to a lesser extent.
Refineries operated below 82% of capacity last week, according to the EIA. Operating levels are typically around 95% at this time of year.
Analysts were more accurate in their reading of distillate inventories, which include diesel and heating oil. These fell by 3.1 million barrels to 133.6 million, not far from the expected reduction of 3.5 million barrels, according to EIA data.
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Ida closed more than 90% of the gas production facilities in the Gulf of Mexico before making landfall. In the aftermath of the storm, some production was shut down and could take time to resume due to flooding and other storm ravages.