Oil steady as China moves to tap oil stocks

LONDON: Oil prices were steady on Thursday as China announced it would take an unprecedented step to release state oil reserves of crude oil to ease pressure on domestic refiners, potentially undercutting demand from elsewhere.

Brent crude was down 2 cents to $72.58 a barrel at 1420 GMT, while West Texas Intermediate (WTI) crude rose 2 cents to $69.32.

The surprise Chinese move aims, according to the National Food and Strategic Reserves Administration, to "better stabilise domestic market supply and demand and effectively guarantee the country's energy security".

Edward Moya, senior market analyst at OANDA, said: "The oil market is in deficit but this China story could disrupt it staying in deficit for the rest of the year."

Meanwhile, about 77% of US Gulf oil production had yet to resume on Tuesday in the wake of Hurricane Ida, equating to about 1.4 million barrels per day (bpd). The market has lost about 17.5 million barrels of oil so far.

US crude, fuel stocks fall in hurricane-affected week: EIA

The Gulf's offshore wells account for about 17% of US output.

American Petroleum Institute (API) data showed that crude drawdown for the week ended Sept. 3 was smaller than expected in a Reuters poll, but gasoline and distillate drawdowns were bigger than expected.

US crude oil production is expected to fall by 200,000 bpd in 2021 to 11.08 million bpd, the US Energy Information Administration (EIA) said on Wednesday, noting that Hurricane Ida should force a bigger decline than its previous forecast for a drop of 160,000 bpd.

However, prices were pressured by the US Energy Information Administration on Wednesday cutting its 2021 global oil demand growth forecast, with little change to its 2022 estimate.

"Brent has maintained a holding pattern during the month of September as conviction in the oil complex has eased given the array of conflicting fundamentals within the market," said StoneX analyst Kevin Solomon.