By Adedapo Adesanya
The Brent crude depreciated on Thursday as investors took profits after a recent price rally spurred by supply disruptions amid stronger demand.
The price of the commodity slipped by 11 cents or 0.12 per cent yesterday to $88.33 per barrel, while the West Texas Intermediate (WTI) crude dropped 67 cents or 0.77 per cent to sell at $86.29 per barrel.
Supply concerns have mounted this week after a fire temporarily halted flows through an oil pipeline running from Iraq’s Kirkuk to the Turkish port of Ceyhan on Tuesday.
Earlier in the week, an attack by Yemen’s Houthis on the United Arab Emirates, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), heightened geopolitical risks.
The market is also getting support from supply shortfalls from the OPEC+ producer group comprising OPEC and allies led by Russia.
According to the International Energy Agency (IEA) on Wednesday in its monthly oil report, the group produced about 800,000 barrels per day below its production targets in December.
The IEA said that while the oil market could be in a significant surplus in the first quarter of this year, inventories are likely to be well below pre-pandemic levels, just as it upgraded its 2022 demand forecast.
However, since price hit their highest in seven years, traders took their profit on Thursday, leading the commodity to fall.
Prices also dipped after the US Energy Information Administration reported a modest inventory build of 500,000 barrels for the week to January 14 compared with a draw of 4.6 million barrels for the previous week.
A day earlier, the American Petroleum Institute (API) had estimated a draw in crude oil inventories of 1.4 million barrels.
An investment bank, Goldman Sachs says it expects global inventories to fall to the lowest in more than 20 years as did the spike in geopolitical tension in the Middle East following the drone attacks on UAE facilities by the Yemeni Houthis.
OPEC+ believes Brent crude could before long rise to $100 per barrel, a scenario that some investment banks have already forecast but many said this would not be ideal for the cartel as it would stoke inflation.
