By Adedapo Adesanya
Crude oil prices fell for the second day in a row on Thursday, shedding the gains recorded earlier in the day after market optimism waned.
The Brent crude, which had risen above $30 earlier in the day, later lost 27 cents or 0.91 percent to sell at $29.44 per barrel, while the US West Texas Intermediate (WTI) crude fell by 2.04 percent or 45 cents to trade at $23.54 per barrel.
Prices had spent much of the session facing north as a result of Saudi Arabia’s decision to lift prices to help stabilize the market already experiencing a glut.
Saudi Arabia’s oil giant, Aramco, raised the price for all its crude oil grades to all regions for June.
According to the new development, its flagship Arab Light crude grade will be sold in Asia next month at a $5.90 a barrel discount to the Oman/Dubai average. This is a rise by $1.40 a barrel from May.
Another information that had helped the market earlier in the day was the slow rise in crude inventory in the United States. Latest stockpiles grew by 4.6 million barrels, which was smaller than the 8.67 million barrels build analysts had been expecting.
Some signs of easing tensions between China and the US in a renewed spat may have contributed to oil’s earlier gains.
On Thursday, there were reports that the US trade negotiator, Mr Robert Lighthizer, and his Chinese counterpart, Mr Liu He, were scheduled to have a call to discuss progress on a phase-one trade deal between the countries that had looked to be disrupted by President Donald Trump.
However, these have all proven to be short term helpers as the problem of plunge in demand and oversupply still exist.
Demand for crude oil has fallen by 30 million barrels per day as “stay-at-home” orders from governments all over the world have brought non-essential travel to slow down the economies.
At the same time, the world’s largest oil producers have begun cutting production on May 1 but the major problem that accumulated before the cut began continue to affect the market.
In latest figures, a substantial glut of crude remains, with supplies from the Middle East soaring to their highest level since at least January 2017 in April.
Saudi Arabia, Iraq, Kuwait and the United Arab Emirates (UAE), which account for about 70 percent of OPEC’s production, shipped a combined average of 18.9 million barrels a day of crude and condensate in April, 2 million barrels a day more than revised March levels.
Even as OPEC countries have started taking off 9.7 million barrels daily off production, there have been reports that smaller members like Kazakhstan, may struggle to cut output, raising fears that they are not compliant with the agreement.
Dipo Olowookere