By Adedapo Adesanya
The Brent crude rose by 0.39 per cent or 26 cents on Wednesday to $67.53 per barrel as the Energy Information Administration (EIA) reported a smaller than expected inventory build of 100,000 barrels.
It was also the same pattern with the West Texas Intermediate (WTI) crude futures, which edged higher yesterday by 0.27 per cent or 17 cents to sell at $64.03 per barrel.
The rise in the US stockpiles was a five-year seasonal average of 493.1 million barrels. Analysts had expected the EIA to report a lightly larger inventory increase of about 375,000 barrels.
A week earlier, the EIA reported a modest inventory build in crude oil, at 600,000 barrels.
It was observed that the market maintained its bullish position on Wednesday as the Organisation of the Petroleum Exporting Countries (OPEC) injected some optimism by confirming that there would be an ease in the production cuts next month amidst surging COVID-19 cases in a major oil-consuming nation, India, which weighed on prices earlier in the week.
According to reports, during the meeting of the Joint Ministerial Monitoring Committee of OPEC and its allies, OPEC+, the secretary-general of the body, Mr Mohamed Barkindo, was optimistic that “the oil market continues to reap the benefits of the DoC’s support for sustainable oil market stability and providing a platform the global economic recovery.”
He added that “the positive trajectory of the global economy, coupled with stimulus measures, progress on vaccinations and the summer travel season, as driving forces for the improving oil demand outlook in the second half the year.”
The alliance decided to stick to plans for a gradual easing of oil production restrictions from May to July, an indication that the group is confident that global demand will recover.
The group forecast global oil demand in 2021 would grow by 6 million barrels per day after demand plunged by 9.5 million barrel last year.
Increased vaccination efforts in the next six months as lockdowns are set to soon be lifted in Europe and other recovering economies also sustained the market. A positive outcome will see cars return to the road and demand for jet fuels will increase.
Despite the general optimism, in reality, the market continues to weigh the situation in India as the COVID-19 death toll surged past 200,000 and infections have climbed by more than 300,000 cases a day for a week.
Dipo Olowookere