Prices briefly erased gains when China said it would sell 7.38 million barrels of crude from reserves. However the volume is a relatively insignificant amount — only about half of one day’s worth of typical crude processing — and the market subsequently recovered.
Traders are also weighing the impact of storm Nicholas, which could pose a threat to coastal refineries and petrochemical facilities.
Global oil supplies fell by 540,000 barrels a day in August amid unexpected disruptions and will be flat this month, according to the International Energy Agency. The world will have to wait until October for extra supply as output losses from Hurricane Ida wipe out increases from OPEC+, the IEA said in a monthly report.
“Lower inflation, less risk of aggressive tapering,” said Ole Hansen, head of commodities strategy at Saxo Bank. “It is difficult to find a bearish trigger with oil supply from the Gulf still struggling to recover while demand looks robust.”
In an indication of the tightening market, global inventories that ballooned during the pandemic have shrunk back to the lowest level in 20 months. About 2.97 billion barrels of crude were stored at onshore facilities as of Sept. 5, the least since January 2020, according to data analytics firm Kayrros.
There are also signs of a stronger physical market, with Chinese companies buying grades from Brazil and Russia at higher premiums than a month earlier. The purchases come amid speculation that authorities are about to allocate more import quotas.
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