News ID: 315749
Published: 0220 GMT August 25, 2021

Oil steadies near $71 after two-day rally

Oil steadies near $71 after two-day rally

Oil prices steadied near $71 a barrel on Wednesday, taking a breather after a strong rally in recent days as Mexico was set to resume crude production following a major outage.

Brent crude was up 14 cents, or 0.2%, to $71.19 a barrel by 1028 GMT, reversing earlier losses. U.S. West Texas Intermediate (WTI) crude was up 8 cents, or 0.12%, to $67.62, Reuters reported.

Both benchmark contracts over the previous two days rose by about 8%. That rally erased most of the slump from a seven-day losing streak on the back of a resurgence in COVID-19 cases.

The rally came after Mexican supply fell by more than 400,000 barrels per day following a fire on an oil platform. Mexico's state oil firm said it expected to resume production by Aug. 30.

"While volatility looks set to continue, we see further gains for oil as global economic normalisation continues and OPEC remains disciplined on crude supplies," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

The bank expects Brent crude prices to rise to $75 a barrel by December.

American Petroleum Institute data showed crude inventories fell 1.6 million barrels for the week ending Aug. 20, while gasoline stockpiles fell one million barrels, according to sources, who spoke on condition of anonymity.

Analysts were expecting crude stockpiles to fall by 2.7 million barrels and gasoline stocks to drop by 1.6 million barrels, a Reuters poll showed.

Last week's losses were driven by fears that the spread of the highly contagious Delta variant of the coronavirus in Asia would slow the region's economic recovery.

In a promising sign that the spread of Delta infections was easing in China, the country on Wednesday reported just 20 new confirmed coronavirus cases for Aug. 24, down from 35 a day earlier.

Also, China's state-run energy major Sinopec said on Wednesday it had discovered a new 100-million-tonne oil and gas field in the Shunbei area of the Tarim Basin in the country's Xinjiang region.

An exploration well drilled by the company's northwest China unit achieved a daily flow of 865 tonnes (6,315 barrels) of crude oil and 590,000 cubic metres of natural gas, Sinopec said on Weibo, a Twitter-like microblogging platform.

It gave no precise resource estimate, saying only that more than 100 million tonnes of oil and gas had been discovered.

Annual oil output from Sinopec's Shunbei field in Xinjiang, which was discovered in 2016, rose by nearly 30% in 2020 to about one million tonnes, while gas production was up 32% to 350 million cubic metres.

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