Oil prices rose for a third week in a row to a near three-year high on Friday as global output disruptions have forced energy companies to pull large amounts of crude out of inventories.
The rally was slightly dampened by China’s first public sale of state crude reserves.
Brent futures rose 84 cents, or 1.1 per cent, to settle at $78.09 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 68 cents, or 0.9 per cent, to settle at $73.98.
That was the highest close for Brent since October 2018 and for WTI since July 2021, both for a second day in a row, according to Reuters.
It was the third week of gains for Brent and the fifth for WTI mostly due to U.S. Gulf Coast output disruptions from Hurricane Ida in late August.
New York Harbor Ultra Low Sulfur Diesel (ULSD) futures also closed at their highest since October 2018.
“As oil prices are on track to close another week of gains, the market is pricing in a prolonged impact of supply disruptions, and the likely storage draws that will be needed to fulfill refinery demand,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
Some disruptions could last for months and have already led to sharp draws in U.S. and global inventories.
U.S. oil refiners were hunting to replace Gulf crude, turning to Iraqi and Canadian oil, traders said.
India’s crude imports rose to a three-month peak in August, rebounding from July’s near one-year low.
Some members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, have struggled to raise output due to under-investment or maintenance delays during the pandemic.
Russia said it will remain a reliable supplier of energy to global markets. Russian gas giant Gazprom (GAZP.MM) had been accused of doing too little to increase its natural gas supplies to Europe, where prices have soared.
Iran, which wants to export more oil, said it will return to talks on resuming compliance with the 2015 Iran nuclear deal “very soon”, but gave no specific date.
Edward Moya, senior market analyst at OANDA, said: “Extra Iranian barrels of crude seem unlikely to be a 2021 story,” noting negotiations “will be a long drawn-out process.”
Kazakhstan’s biggest oil producer, Chevron-led (CVX.N) Tengizchevroil (TCO), will delay components of its $45.2 billion expansion project by three to seven months.
In the United States, drillers added 10 oil rigs this week, putting the oil and gas rig count up for a 14th month in a row.
Brent could hit $80 by the end of September due to stock draws, lower OPEC production and stronger Middle East demand, UBS analysts wrote.
China’s first public sale of state oil reserves capped crude price gains. PetroChina and Hengli Petrochemical (600346.SS) bought four cargoes totaling about 4.43 million barrels, sources said.
Analysts also noted indebted China Evergrande remains a risk to oil prices after the company’s electric car unit warned it faced an uncertain future unless it got a swift injection of cash.
