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Oil slips on China's plan to release crude from reserves, airline demand woes

Oil slips on China's plan to release crude from reserves, airline demand woes

FILE PHOTO: A petrol station attendant prepares to refuel a car in Rome, Italy, January 4, 2012. REUTERS/Max Rossi

MELBOURNE : Oil prices dipped on Friday, heading for weekly losses of nearly 2per cent, after China announced it would release oil from it strategic reserve and some U.S. airlines, key to a recovery in jet fuel demand, warned of a slowdown in ticket sales https://www.reuters.com/business/aerospace-defense/united-airlines-warns-delta-variant-hit-revenue-capacity-2021-09-09.

U.S. West Texas Intermediate (WTI) crude futures fell 8 cents, or 0.1per cent, to US$68.06 a barrel at 0133 GMT, after dropping 1.7per cent on Thursday. Brent crude futures fell 12 cents, or 0.2per cent, to US$71.33 a barrel, extending a 1.6per cent drop from Thursday.

Both settled at their lowest since Aug. 26 on Thursday.

China's state reserves administration said on Thursday it would release crude oil reserves https://www.reuters.com/business/energy/china-release-state-crude-oil-reserves-first-time-2021-09-09 to the market via public auction to ease the pressure of high feedstock costs on domestic refiners, in a move that was described as a first.

An analyst said the release from the reserve came as Chinese majors had to replace supplies they had bought for September and October loadings from Shell in the U.S. Gulf of Mexico.

Royal Dutch Shell Plc, the largest oil producer in the U.S. Gulf of Mexico, has cancelled some export cargoes https://www.reuters.com/business/energy/shell-declares-force-majeure-some-oil-deliveries-after-hurricane-ida-2021-09-09 due to Ida's damage to offshore facilities.

Almost 1.4 million barrels per day (bpd) of offshore oil production remains shut https://www.reuters.com/business/energy/three-quarters-us-gulf-mexico-oil-output-remains-shut-2021-09-08 in the Gulf of Mexico and 1 million bpd of refining capacity is also still offline.

"It wasn't good news on the demand front either, with U.S. airlines warning of slowing demand," ANZ Research analysts said in a note.

American Airlines, United Airlines Holdings Inc, Delta Air, Southwest Airlines Co and JetBlue Airways said ticket sales had slowed and cut revenue forecasts as a surge in COVID-19 cases threatens to stall a recovery in travel.

(Reporting by Sonali Paul; Editing by Himani Sarkar)

Source: Reuters

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