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

Oil prices rose slightly on Thursday, rebounding from a six-week low as investors wondered how much crude the major countries would release from their strategic reserves and how much that would ease global oil demand pressure.

Prices fell to six-week lows early in the session as China said it was trying to draw down reserves. Reuters reported on Wednesday that the United States is asking major consumer countries to consider releasing reserves to bring prices down.

Washington's push to cool markets by asking China to join in coordinated action for the first time is prompted by high gasoline prices and other inflationary pressures that have sparked a political backlash.

"Japan and South Korea have resisted a stock release, so we're going back a bit," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "The market will continue to be nervous because it's waiting for the release."

Brent crude rose 53 cents, or 0.7%, to $80.81 a barrel at 11:55pm ET (1655 GMT). The session low of $79.28 was the lowest since October 7. West Texas Intermediate crude futures rose 18 cents to $78.54 a barrel. It also fell during the session to its lowest level since early last month at $77.08.

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A release, even if only from the US and China, is likely to bring prices down, at least temporarily.

Prices hit a seven-year high in October as the market focused on a rapid recovery in demand as more people received the COVID-19 vaccine and restrictions were lifted.

Prices rose as demand increased and the Organisation of Petroleum Exporting Countries (OPEC) and its allies, called OPEC , decided to increase production only slowly.

The International Energy Agency and OPEC have already said more supplies will be available in the coming months, but Washington has pressed for a faster pace.

The proposed release of reserves poses an unprecedented challenge to OPEC because it involves China, a leading importer .

China's State Reserves Bureau said it was working to release crude reserves, although it declined to comment on the US request.

A spokesman for Japan's Industry Ministry said the United States had asked Tokyo to cooperate in tackling rising oil prices. but Japan by law could not use reserves to lower prices.

A South Korean official said he was considering a US request to Seoul to release some oil reserves, but added that it could only release oil if there was an imbalance in supply.