On Thursday, crude oil prices dove to the lowest level in two weeks due to China’s plan to release state oil reserves, the small US weekly crude consumption, and the US Treasuries rally.
Brent futures settled at USD71.45/barrel after falling by 1.6% or USD1.15 while US WTI crude slipped by 1.7% or USD1.16 to close at USD68.14/barrel. For both benchmarks, the results were the lowest since August 26.
In the early session, both Brent and WTI actually turned positive after the reports that a ship was stuck in the Suez Canal. However, the ship was refloated and caused no delays.
Oil dipped following China's state reserves administration’s announcement for the release of crude reserves in phases via public auction to help domestic refiners control costs. The country’s domestic refiners and chemical companies would be greatly helped by the decision.
In the week to September 3, the US crude stockpiles dropped by 1.5 million barrels, way below the expectations for a 4.6 million barrel draw. Still, oil prices were being helped by the 7.2 million barrel fall in gasoline inventories.
The US tremendous auction in the 30-year bond with the lowest interest rate print since January caused damage to the oil market. Analyst John Kilduff of Again Capital LLC commented that it looked like a flight to safety.
Moving forward, the US gasoline stocks are expected to decline by just 3.4 million barrels.
