Oil prices rose to a near three-year high yesterday and headed for a third straight week of gains, supported by global output disruptions and inventory draws.
The rally was slightly dampened by China’s first public sale of state crude reserves.
Brent climbed 53 cents, or 0.7 per cent, to $77.78 a barrel, while US West Texas Intermediate (WTI) crude rose 40 cents, or 0.6pc, to $73.70.
Brent is on track for its highest close since October 2018 for a second day in a row and WTI is on track for its highest close since July this year, also for a second day.
It would be the third week of gains for Brent and the fifth for WTI mostly due to disruptions in US Gulf Coast output after Hurricane Ida in late August.
New York Harbour Ultra Low Sulfur Diesel (ULSD) futures rose to 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 fulfil 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 US and global inventories.
US oil refiners were hunting to replace Gulf crude, turning to Iraqi and Canadian oil, traders said.
India’s crude oil imports rose to a three-month peak in August, rebounding from July’s near one-year low.
Some members of the Organisation of the Petroleum Exporting Countries and their allies, known as Opec+, have also struggled to raise output due to under-investment or maintenance delays during the pandemic.
Iran, which wants to export more oil, said it would return to negotiations soon on resuming compliance with a 2015 nuclear deal with world powers. It did not give a date.
Brent could hit $80 by the end of September due to stock draws, lower Opec production and stronger Middle East demand, UBS analysts wrote.
But China’s first public sale of state oil reserves capped crude price gains. PetroChina and Hengli Petrochemical bought four cargoes totalling about 4.43 million barrels, sources said.