Oil Set for Weekly Loss After China Confirms Release of Reserves

Oil headed for its first weekly decline in three after Chinas government confirmed that it had released crude from its strategic reserves in an unprecedented intervention in the global market.

Futures in New York slipped near $68 a barrel on Friday after losing 1.7% in the previous session. Beijing tapped its giant oil reserves to “to ease the pressure of rising raw material prices,” the National Food and Strategic Reserves Administration said. It didnt offer further details, but people familiar with the matter said the statement referred to millions of barrels of oil that were supplied to domestic refineries in July.

China‘s move -- and the chance that it might do it again -- adds another layer of uncertainty to the global oil market, which is still grappling with impact of the fast-spreading delta virus variant in many regions. The world’s largest importer of raw materials saw a sharp acceleration in producer price inflation last month amid surging prices of energy and metals.

The prompt timespread for Brent was 66 cents a barrel in backwardation -- a bullish structure where near-dated contracts are more expensive than later-dated ones. That compares with 63 cents a week earlier.

U.S. crude stockpiles fell last week as production tumbled the most on record due to disruptions caused by Hurricane Ida. Inventories shrunk by 1.53 million barrels, according to the Energy Information Administration. The destructive storm led to a 1.5 million-barrel decline in daily crude output.

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