By Adedapo Adesanya
Crude oil prices overlooked unpleasant news from the United States’ Energy Information Administration (EIA) which showed that there was another high crude inventory build of 13.8 million barrels for the week to March 5.
On Wednesday, the international benchmark futures, Brent crude, gained 41 cents or 0.61 per cent to sell at $67.93 per barrel, while the US West Texas Intermediate (WTI) crude rose by 45 cents or 0.7 per cent to trade at $64.46 per barrel.
This is the second straight week of a massive crude oil inventory build, as the market was faced with an inventory of over 21 million barrels in the previous week. Analysts had expected an 833,000-barrel decline in crude oil inventories.
A day earlier, the American Petroleum Institute reported an estimated crude oil inventory build of as much as 12.79 million barrels for the week to March 5, versus analyst expectations of a modest increase to the tune of 816,000 barrels.
Business Post gathered from American media that following the excessively cold weather that halted oil production in the US, producers appear to be coming back online faster than refiners, swelling inventories.
Crude production rose to 10.9 million barrels per day, rebounding to near levels before the freeze, while refinery utilization rates jumped 13 percentage points, but that only brought overall capacity use to 69 per cent, far below seasonal averages for this time of year.
The market is still profiting off decisions by the decision from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to leave production cuts as they are for another month and reports that the supply of crude was tightening globally as demand began to pick up.
OPEC+ agreed last week to largely maintain production cuts in April.
The market also got fresh news about global recovery as the Organisation for Economic Cooperation and Development (OECD) said in its interim economic outlook that the global economy is set to rebound with 5.6 per cent this year and expand 4 per cent next year following the brutal impact of the COVID-19 pandemic.
Its previous forecast had been for growth of 4.2 per cent this year while for 2022, it had predicted an improvement of 3.7 per cent.
It noted that the US and Chinese economies are expected to bounce back faster, while other regions may continue struggling until the end of 2022.
It added that in poorer countries, substantial job losses have increased poverty and the deprivation of millions of workers.
Modupe Gbadeyanka