By Adedapo Adesanya
Crude oil surged by nearly 3 per cent on Wednesday, bolstered by record crude exports in the world’s largest oil-producing country, the United States.
Crude exports rose to 5.1 million barrels a day, the most ever, dropping net US crude imports to their lowest in history.
Also, the US Dollar’s weakness supported the improvement in the prices of oil, as the greenback’s strength of late has been a notable factor inhibiting oil market gains.
The greenback declined for a second day to its lowest level in three weeks, making commodities priced in the currency more attractive.
The US currency has been stronger than other key foreign currencies as the Federal Reserve has been more aggressive about raising rates.
These two factors helped the price of the Brent crude futures to rise yesterday by $2.17 or 2.3 per cent to $95.69 a barrel as the US West Texas Intermediate (WTI) crude futures rose by $2.59 or 3 per cent to $87.91 per barrel.
The markets remained in the middle ground as traders mull a dimming outlook for demand but see a tighter landscape for supply amid production cuts and European sanctions on Russian oil taking full effect.
The Organisation of the Petroleum Exporting Countries (OPEC) surprised markets with a larger-than-expected cut to its output targets earlier this month.
Oil analysts anticipate supply will tighten in the coming months after that move, and Europe is expected next month to ban oil imports from Russia and restrict Russian shippers from the global shipping insurance industry.
The ban may tighten world shipping markets, which could also increase the price of oil.
Many analysts believe Russia can circumvent the measures, but it could still cause the country to shut down between 1 million and 2 million barrels of daily production.
Prices also moved higher after the Energy Information Administration (EIA) reported a crude oil inventory increase of 2.6 million barrels for the week ending October 21 compared with a draw of 1.7 million barrels for the previous week, accompanied by moderate moves in fuel inventories.
Meanwhile, the administration of Mr Joe Biden is trying to solve the fuel supply problem, with the latest move involving Energy Secretary Jennifer Granholm meeting with industry executives to discuss the possibility of shuttered refineries reopening.
Modupe Gbadeyanka