By Adedapo Adesanya
Oil prices fell on Wednesday, October 27 after industry data showed crude stockpiles rose more than expected and fuel inventories unexpectedly increased last week in the United States, the world’s largest oil consumer.
Brent crude oil fell by 2.67 per cent or $2.31 to trade at $84.09 per barrel after closing at the highest in seven years on Tuesday.
The US West Texas Intermediate (WTI) futures depreciated by 2.35 per cent or $1.99 to $82.66 a barrel after gaining 1.1 per cent in the previous session.
Crude oil prices retreated after the Energy Information Administration (EIA) reported an inventory build of 4.3 million barrels for the week to October 22.
This was contrary to the modest draw of 400,000 barrels for the previous week and analyst expectations for a build of 1.65 million barrels.
The loss took off steam after oil prices hit a high lasts seen in 2014 on Tuesday, driven up by continued robust demand in the United States and the tight global supply situation, which the Organisation of the Petroleum Exporting Countries and allies (OPEC+) has signalled will not alleviate for now with additional supply.
The situation is expected to remain tense especially as the global energy crunch is still nowhere close to subsiding.
Analysts expect prevailing strength in oil prices in November and December as supply lags demand because OPEC+ seems unwavering in changing its stance to add more than 400,00 per barrel per day to the market.
Saudi Arabia’s oil minister, Prince Abdulaziz bin Salman earlier this week said OPEC+ was in no rush to boost production in response to calls for more barrels as the cartel didn’t take anything for granted.
“We don’t take things for granted,” the official said. “We still have Covid, there are still lockdowns,” and jet fuel supply remains constricted. “So, we’re not yet out of the box and we’re not out of the realm of Covid.”
His Nigerian counterpart, Mr Timipre Sylva echoed the sentiment in separate comments saying, “We have to look at the situation closely before we take action. It’s still very fragile. We must be very cautious before we take the next move.”
“We’ve seen the slow down in China,” Mr Sylva also said. “A lot of people are calling for more oil, but we’re looking at problems in some economies. We know that we haven’t completely opened up yet,” he added.
With Brent rising the past eight weeks and WTI climbing for the past 10 weeks, prices are starting to look overbought, analysts said, even with the cool off in prices necessary, the market will return to bullish territory again.
Modupe Gbadeyanka