By Adedapo Adesanya
Oil prices settled largely unchanged on Wednesday after government data showed a smaller-than-anticipated build in crude inventories in the United States.
Brent crude futures settled at $86.12 a barrel, down a cent, while the US West Texas Intermediate (WTI) crude futures settled at $80.15 a barrel, up by 2 cents.
Prices saw a minor increase when the US Energy Information Administration (EIA) reported an oil inventory build of 500,000 barrels for the week to January 20.
The latest change in inventories compared with two sizeable weekly builds—one of 8.4 million barrels for the second week of January and a 19-million-barrel one for the first week of the month.
At 448.5 million barrels, crude oil inventories in the United States are 3 per cent above the five-year average for this time of year.
Crude oil prices, meanwhile, rose to the highest in seven weeks earlier this week before deflating somewhat as traders took profit. Earlier in the week, Brent crude hit $89 per barrel before retreating, suggesting expectations of a quick Chinese demand rebound remain strong.
At the same time, worry about the immediate prospects of the global economy remains just as strong, as it appears.
On Tuesday, oil prices shed 2 per cent after the release of the latest economic data from the United States, which showed business activity had shrunk in January—the seventh month of contractions in a row.
Prices have rallied in 2023, with global benchmark Brent crude topping $89 a barrel this week for the first time since early December on the ending of China’s COVID-19 controls and hopes that rises in US interest rates will soon taper off.
On the supply side, the volume should remain steady as the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, are likely to endorse the group’s current output levels at a February 1 meeting.
OPEC+ sources said on Tuesday that hopes of higher Chinese demand would drive an oil price rally, which balances worries over inflation and a global economic slowdown.
Recall that in December, the 23-man group, including Russia, left policy unchanged, and their next full meeting is not scheduled until June.
Meanwhile, the European Union (EU) and Group of Seven (G7) is set to broaden a price cap on Russian crude to refined products from February 5.
