By Adedapo Adesanya
Oil prices on Wednesday held on to gains from the previous session despite increase in crude inventories in the United States, hitting a record high.
Brent Crude, international benchmark, rose 2 cents or 0.02 percent to trade at $41.19 per barrel. Brent has more than doubled since falling to a 21-year low below $16 in April.
The US West Texas Intermediate (WTI) Crude was up 11 cents or 0.28 percent at $39.05 per barrel.
US crude stocks rose by 5.7 million barrels in the week ended June 5 to 538.1 million barrels, according to a US Energy Information Administration report (EIA) released on Wednesday.
With this build in inventories, it might bring about a renewed worry for traders who fear oil glut due to weak demand, which are not good for oil prices.
Prices are still holding on to current levels due to decisions from the Organisation of the Exporting Countries and allies (OPEC+) to extend current production cut to July after member states on Saturday pledged compliance.
OPEC+ will slash oil supplies by 9.7 million barrels per day for another month after June, meaning there will about 10 percent drop in pre-pandemic supply.
The inventory build exceeded analysts’ expectations and was due to the third consecutive week of big imports from Saudi Arabia, which came to more than 1.5 million barrels per day.
During a price war between Saudi Arabia and Russia in March and April, the kingdom boosted exports to its destinations, including the US.
Prices were also supported by the US Energy Department purchasing 126,000 barrels of crude for the US strategic reserve.
US President Donald Trump in March had ordered the department to fill the Strategic Petroleum Reserve, which would have been a purchase of about 77 million barrels. However, the Energy Department cancelled a plan to purchase an initial 30 million barrels after Congress declined to fund it.
The department last month said it would buy up to 1 million barrels of sweet crude for the reserve to help small to medium sized producers in the country affected by the COVID-19 pandemic.
Modupe Gbadeyanka