U.S. West Texas Intermediate crude oil futures are trading higher on Friday, clawing back some of this week’s losses in the process. The catalysts behind the early strength are growing concerns over supply tightness in the United States in the wake of the damage from Hurricane Ida and as the possibility of improving U.S.-China trade relations bolstered demand for riskier assets.
China to Release Oil from its Strategic Reserve
Worries over tight supply balances and the Gulf’s offshore oil production are offsetting bearish news from China which hit the market hard on Thursday. In the previous trading session, sellers drove prices off their highs after China announced plans to sell state crude reserves in phases via public auction.
The announced sales will “better stabilize domestic market supply and demand, and effectively guarantee the country’s energy security,” the National Food and Strategic Reserves Administration said, adding that it plans to regularly release and replenish China’s oil reserves.
Hurricane-Driven Energy Losses to Continue for Weeks
Royal Dutch Shell Plc, the largest oil producer in the U.S. Gulf of Mexico, on Thursday canceled some export cargoes due to damage to offshore facilities from Hurricane Ida, signaling energy losses would continue for weeks.
About three-quarters of the Gulf’s offshore oil production remains halted since late August following Ida, one of the most devastating…