Oil Prices Fall Sharply After Coordinated Opening of Reserves in China and US

Oil has taken a fresh hit, continuing its fall from a seven-year high set in October as China said it was releasing some of its oil from strategic reserves – just days after the US invited it to participate in the joint sale.

Currently, Beijing is carrying out work to seize oil, said a spokeswoman for the administration of the National Food and Strategic Reserve.

It is unclear if the authorities are doing this in response to a request from Washington, which was voiced at a virtual summit earlier this week between US President Joe Biden and his Chinese counterpart Xi Jinping.

Earlier this year, China used its national crude oil reserves to drive down domestic prices and also made a partial sale from the reserves. A spokeswoman for the backup bureau said Thursday that more details on the volume and date of the sale will appear on its website in due course.

On Wednesday, oil prices fell after OPEC and the IEA warned of an impending oversupply. Rising COVID-19 cases across Europe also increased the downside risks to demand.

Prices fell further after the close of trading after Reuters reported that the United States was asking other major global oil consumers, such as China and Japan, to consider a coordinated release of oil reserves to lower prices.

Futures for Brent crude oil fell in price on Thursday at 10:45 Moscow time by 0.84 dollars, or 1.05%, to 79.46 dollars after falling on Wednesday by 1.36 dollars, or 1.7%. US West Texas Intermediate (WTI) crude oil futures lost $ 1.13, or 1.44%, to $ 77.20 on Thursday.

Traders said that funds appear to be looking at the likelihood that supply will start outstripping demand, with a sharp decline in nearby futures indicating that funds are closing long positions.

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