By Adedapo Adesanya
The price of the Brent crude rose by 72 cents or 0.86 per cent on Wednesday to trade at $84.44 per barrel as the Energy Information Administration (EIA) reported an inventory decline of 4.6 million barrels for the week to January 7 as against the estimated 2.1-million-barrel decline for the previous week.
Also, the United States West Texas Intermediate (WTI) crude oil futures appreciated during the session by $1.24 or 1.53 per cent to sell for $82.46 per barrel.
U.S. crude inventories have dropped for seven consecutive weeks and this was their lowest since October 2018, the US government agency stated, beating the projected 1.9 million-barrel drop.
This, coupled with the fact that inventories have been tightening across the globe as major producers struggle to increase supply even as demand rises despite rising cases of Omicron, supported prices yesterday.
In the past sessions, prices have been alternating between the bullish and bearish territories due to production changes in Libya, as well as fluctuating concerns about the effect of the Omicron variant on the demand for oil and weak production capacity by producers.
Analysts noted that despite rising cases of the Omicron variant, it has yet to wreak the havoc of the Delta variant and may never do so, keeping the global recovery on track.
The oil market also got support from the falling US Dollar. The greenback fell to a fresh two-month low against a basket of six currencies after data showed US consumer prices rose solidly in December.
A weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies.
Meanwhile, the Organisation of the Petroleum Exporting Countries and allies (OPEC+) continue to hold back more than 3 million barrels per day in output, tightening the market.
Even though the alliance is raising output targets by 400,000 barrels per day, technical difficulties are preventing some countries from meeting their designated quotas.
In terms of demand, European jet fuel refining margins returned back to pre-pandemic levels as supplies in the region increased and global aviation activity recovered.
Modupe Gbadeyanka