By Adedapo Adesanya
Oil futures in the international market fell on Thursday, August 27 as there were expectations of quick recovery after one of the strongest hurricanes in years that threatened production in the United States made landfall.
Brent crude was down 54 cents or 1.18 per cent at $45.10 per barrel while the US West Texas lnternational (WTI) crude lost 35 cents or 0.81 per cent to sell at $43.04 per barrel.
Both futures had risen earlier in the week to a five-month high on the back of a 84.3 per cent shut-in of current oil production in the Gulf of Mexico. Natural disasters like hurricanes act as factors that lead to gain for the commodity.
But on Thursday, analysts noted that production will be restored within a matter of days as Hurricane Laura has now weakened to a tropical storm as it moved further to other cities in the country.
It was noted that around 3 million barrels a day of US refining capacity was closed or reduced.
Gulf coast oil production facilities, refineries and energy infrastructure projects are designed to withstand harsh weather conditions like these. So, there is no expectation of widespread damage to facilities, other than temporary shut-ins.
The news underscored data released on Wednesday that showed large drops in US crude inventories. The Energy International Agency (EIA) reported a fifth straight weekly decline in crude inventories, down 4.7 million barrels for the week ended August 21.
The American Petroleum Institute (API) weekly report showed crude inventory fell 4.5 million barrels, slightly ahead of expectations.
Worries over the COVID-19 pandemic, which has squeezed demand and sent prices to record lows in April still continued to be a presence but news that the number of worldwide active coronavirus cases has begun stabilising as recoveries match number of new cases may serve as a factor for prices to find support.
Dipo Olowookere