By Adedapo Adesanya
The price of crude oil depreciated on Wednesday as demand concerns outweighed tight global supply while fuel inventories rose in the United States.
Brent crude futures fell by 37 cents or 0.3 per cent to $106.55 a barrel as the US West Texas Interme crude futures fell by 33 cents or 0.3 per cent to $99.55 a barrel.
Oil prices have been volatile as traders have had to worry about tighter global supply because of the loss of Russian barrels following the country’s invasion of Ukraine, with recessionary worries that could weaken energy demand.
It was flipped when the US Energy Information Administration (EIA) showed moderate fuel demand during the peak summer driving season across the country.
US fuel inventories rose 3.5 million barrels last week, government data showed on Wednesday, far exceeding analysts’ forecasts.
Analysts noted that with the current market trajectory, Brent oil futures could fall to $100 per barrel by Q4 2022, implying a modest fall from current levels.
In the meantime, analysts expect oil supply tightness to keep supporting prices while US shale oil production expands at a modest pace.
As the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) struggle to increase production, the oil market will struggle to balance out in the coming months, thereby propping up prices.
In Libya, an OPEC country, the National Oil Corporation (NOC) said crude production has resumed at several oilfields, after lifting force majeure on oil exports last week.
Libya has been in chaos since a NATO-backed uprising toppled and killed longtime dictator Muammar Gaddafi in 2011.
Oil production has been a flashpoint of conflict throughout the last decade, as warring factions fight over Africa’s third largest energy reserves.
Libya’s massive oil reserves have been a major source of worry due to ongoing political disputes and the market is on edge to see if the North African country will bring back full-scale production of light crude across the country.
Modupe Gbadeyanka