By Adedapo Adesanya
Oil prices showed no sign of slowing yet again on Wednesday as a drop in crude inventories in the United States supported the market amid a supply crunch in the energy market.
Brent crude rose by 80 cents or 0.94 per cent to trade at $85.88 per barrel and the US West Texas Intermediate (WTI) crude added 91 cents or 1.1 per cent to sell at $83.87 per barrel.
A week after it reported a sizeable oil inventory build that pushed prices lower for a while, US crude stocks fell by 431,000 barrels in the most recent week, the Energy Information Administration (EIA) said, as against expectations for an increase.
At 426.5 million barrels, inventories remain below the five-year average for this time of the year.
On its part, the American Petroleum Institute (API) noted a build last week which was estimated at 3.294 million barrels, above analyst expectations of a 2.233 million barrels build.
Crude markets, in general, remain supported on the back of a global coal and gas crunch, which has driven a switch to diesel and fuel oil for power generation.
The switching from gas to oil could account for the demand of 500,000 to 600,000 barrels per day, depending on winter weather and prices of other sources of energy, a move that has supported oil prices.
However, China’s National Development and Reform Commission (NDRC) said it plans on arresting the high energy prices, a move that could push down oil prices.
The commission said it would bring coal prices back to a reasonable range and crackdown on any irregularities that disturb market order or malicious speculation on thermal coal futures, according to foreign media.
The possible Chinese intervention sent the key Chinese coal futures plunging early on Wednesday.
In entirety, the market is highly bullish as supply has tightened especially with the Organisation of the Petroleum Exporting Countries and allies (OPEC+) maintaining a slow increase in supply rather than intervening to add more barrels to the market, just as US demand has increased.
Modupe Gbadeyanka