Oil hovers above six-week low as China readies crude reserve release

Shafaq News / Oil prices rose slightly on Thursday after dropping to six-week lows as investors wondered about how much crude major economies would release from their strategic reserves and how much that would ease global crude demand pressures.

Prices fell to six-week lows early in the session as China said it was moving to tap reserves. On Wednesday, Reuters reported that the United States was asking large consuming nations to consider a stockpile release to lower prices.

Washington's bid to cool markets, asking China to join a coordinated action for the first time, comes as high gasoline prices and other inflationary pressures have sparked a political backlash.

"Japan and South Korea have shown resistance to releasing reserves, so we're coming back up a little bit," said Phil Flynn, Senior Analyst at Price Futures Group in Chicago. "The market is going to continue to be nervous, because it is on guard from a release."

Brent crude settled up 96 cents, or 1.2%, at $81.24 a barrel. The session low of $79.28 was the lowest since Oct. 7. U.S. West Texas Intermediate crude futures closed 65 cents, or 0.8%, higher at $79.01 a barrel. It also fell during the session to the lowest since early last month at $77.08.

A release, even if only from the United States and China, will likely drive prices lower at least temporarily.

Source: Reuters