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Oil rallies to $73 on tight U.S. supplies, Biden-Xi call

CommoditiesSep 10, 2021 04:07PM ET
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© Reuters. FILE PHOTO: A petrol station attendant prepares to refuel a car in Rome, Italy, January 4, 2012. REUTERS/Max Rossi

By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil rose to briefly top $73 a barrel on Friday, supported by growing signs of supply tightness in the United States as a result of Hurricane Ida and as U.S.-China trade hopes gave riskier assets a boost.

About three quarters of the U.S. Gulf's offshore oil production, or about 1.4 million barrels per day, has remained halted since late August. That is roughly equal to what OPEC member Nigeria produces.

"The market is back to focusing on the tighter supply situation globally, and that is giving it a boost," said Phil Flynn, senior analyst at Price Futures group in Chicago. While China is releasing oil from its strategic petroleum reserve, the amount is more than offset by reduced production in the Gulf of Mexico, Flynn added.

Brent crude rose to settle at $1.47, or 2.3%, to $72.92. The session high was $73.15 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.58, or 2.3%, to $69.72.

Both grades posted a small gain on the week. Brent has rallied 41% this year on supply cuts by the Organization of the Petroleum Exporting Countries and some demand recovery from the pandemic.

Oil and equity markets also got a boost from news of a call between U.S. President Joe Biden and his Chinese counterpart Xi Jinping. The call raised hopes for warmer relations and more global trade, analysts said. [MKTS/GLOB]

"The Biden-Xi phone call has had the same effect on oil markets as it has on other asset classes," said Jeffrey Halley, analyst at brokerage OANDA.

The United States added rigs in the latest week, energy service provider Baker Hughes said, indicating production may rise in coming weeks.

On Thursday, both crude contracts fell more than 1% after China said it would release crude oil reserves https://www.reuters.com/business/energy/china-release-state-crude-oil-reserves-first-time-2021-09-09 via public auction to help ease high feedstock costs for refiners.

In focus next week will be revisions to the oil demand outlook for 2022 from OPEC and the International Energy Agency. OPEC will likely revise down its forecast on Monday, two OPEC+ sources said.

Oil rallies to $73 on tight U.S. supplies, Biden-Xi call
 

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Comments (3)
Alan Rice
Alan Rice Sep 11, 2021 12:26PM ET
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A reminder to Earth: Just because you can...Tic-toc.
Todd Gray
Todd Gray Sep 10, 2021 8:04PM ET
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Two Faced Biden inhibits US production, then publicity whines about how consumers need lower fuel prices. The results of what that party does makes it very hard on working people. And, the decline of the middleclass started in 1971. That was the year liberals recaptured the federal majority they lost after the 1929 crash. Their policies have been responsible for almost every large crash, except the black swans of war.
Alan Rice
Alan Rice Sep 10, 2021 1:53PM ET
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Aside from the continuing world-wide oil glut, it is worthwhile to notice the LNG glut, as well. Tic-toc.
 
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