Adedapo Adesanya
By Adedapo Adesanya
The price of the Brent crude appreciated by 60 cents or 0.75 per cent on Wednesday to trade at $80.60 per barrel.
This is coming a day after the Organisation of the Petroleum Exporting Countries and allies (OPEC+) signalled confidence in oil demand despite the threat posed by the Omicron variant of the coronavirus, agreeing to stick to an agreed output target rise for February.
At the global market yesterday, the price of the United States West Texas Intermediate (WTI) crude also witnessed a rise as it closed higher by 62 cents or 0.81 per cent to sell at $77.61 per barrel.
On Tuesday, OPEC+ agreed to add another 400,000 barrels per day of supply in February, as it had done each month since August.
The major reason for sticking to the initial plan was probably because some of its members like Nigeria, Angola and Libya were having a tough time ramping up production.
While countries like Nigeria and Angola can’t get their production up due to infrastructural challenges, supply disruptions in Libya led the country to declare force majeure on its oil exports after crude oil production had been shut in from four of Libya’s oilfields. This has also supported oil prices through this week.
The EIA inventory report did not spoil the party on Wednesday put to rest the expectations of a large build in US inventories estimated by the American Petroleum Institute (API) on Tuesday.
US crude inventories dropped by 2.1 million barrels, owing in part to tax incentives for producers to reduce inventories before year-end.
However, fuel inventories jumped by more than 10 million barrels, and stocks of distillates rose by 4.4 million barrels. Analysts cited soft demand during the last week of 2021 as people hunkered down due to the Omicron variant of the coronavirus.
Prices were also pressured by the release of minutes from the latest US Federal Reserve meeting that showed policymakers may have to raise rates more quickly than markets anticipated.
