Oil prices were mixed on Friday over expectations of US crude sales from emergency stockpiles to cool off rising prices at a time of strengthening restrictions to counter COVID-19 in the world’s second-largest oil consumer.
International benchmark Brent crude was trading at $84.66 per barrel at 0648 GMT for a 0.22% increase after closing the previous session at $84.47 a barrel.
American benchmark West Texas Intermediate (WTI) was at $82.11 per barrel at the same time for a 0.01% drop after trade in the previous session ended at $82.12 a barrel.
China sold the first batch of crude from its Strategic Petroleum Reserves (SPR) on Sept. 24 in an attempt to curtail rising energy prices.
US President Joe Biden had repeatedly asked OPEC+ producers to increase the group’s collective output to provide additional market supply to lower crude prices. However, the group did not relent to his demands and agreed to adhere to the cartel’s production pact of 400,000 barrels per day in December last year and January and February this year.
This followed Biden’s move to release 50 million barrels of oil from the country’s SPR, the largest petroleum stockpile in the world used for emergencies, which later led to a coordinated effort with other major energy-consuming nations, including China, India, Japan, South Korea, and the UK.
On Thursday, the US Energy Department announced the sale of 18 million barrels of strategic crude oil reserves to six companies, including Exxon Mobil and a Valero Energy affiliate.
US crude inventories rise, lending upward price support
Although gains were capped more when the world’s second-largest oil consumer China stepped up COVID-19 mitigation measures from a rise in daily cases, a more-than-expected decline in the US crude oil inventories provided upward support for the prices.
China’s National Health Commission reported 4,636 deaths from coronavirus on Thursday, including 190 new infections and 124 cases of domestic transmission, pushing the country’s overall infection total to 104,379.
To curb the spread of the virus ahead of the Beijing Winter Olympics, China has applied lockdowns in numerous cities, including Xian, the capital of the Shaanxi Province, and ordered more than 20 million people to stay at home.
According to the latest data released by the Energy Information Administration (EIA), inventories fell by 4.6 million barrels to 413.3 million barrels, exceeding the market expectation of a 1.95 million-barrel drop. With this latest drawdown, crude stocks declined to the lowest level since 2018.
However, US gasoline inventories increased by 8 million barrels to 240.7 million barrels over that period, indicating weak demand in the country.
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