Adedapo Adesanya
By Adedapo Adesanya
Brent crude closed below $75 per barrel on Wednesday, precisely selling at $74.39 per barrel after shedding $2.81 or 3.5 per cent.
It was the lowest level for the crude oil grade since June, as a larger-than-expected rise in US fuel inventories added to worries about fuel demand, also pressuring the West Texas Intermediate (WTI) crude futures by $2.74 or 3.8 per cent in the midweek session to $69.58 a barrel.
The US Energy Information Administration (EIA) reported a crude oil inventory draw of 4.6 million barrels for the week to December 1.
A sizeable inventory build in gasoline and a smaller one in distillates, however, offset the crude draw.
The crude inventory draw followed a weekly estimated inventory build of 1.6 million barrels for the previous week.
A day before the EIA released its latest estimate, the American Petroleum Institute (API) reported its estimate showed an inventory build in crude oil and in fuels over the week to December 1, which sent oil prices even lower.
Per the EIA, fuels last week booked inventory increases.
In gasoline (also known as petrol), the authority reported an estimated inventory build of 5.4 million barrels for last week compared with a build of 1.8 million barrels for the previous week.
The Organisation of the Petroleum Exporting Countries and allies such as Russia, known as OPEC+ agreed late last week on voluntary output cuts of about 2.2 million barrels per day for the first quarter of 2024.
This week, Saudi and Russian officials said the cuts could be extended or deepened beyond March.
Russian President, Mr Vladimir Putin, has travelled to the United Arab Emirates and Saudi Arabia to meet with the UAE’s President Sheikh Mohammed Bin Zayed Al Nahyan and Saudi Crown Prince Mohammed bin Salman. Oil and OPEC+ were on the agenda.
Concerns over China’s economic health also weighed on prices as the rating agency Moody’s lowered the outlook on the world’s largest oil importer’s A1 rating to negative from stable.
Also putting pressure on the market was a rise in the US Dollar as it touched a two-week high, which pressured demand by making oil more expensive for holders of other currencies.
Market analysts worry about oil prices as the only positive news over the last couple of days has been Saudi and Russian officials stating that the OPEC+ cuts could be extended or deepened depending on market situations.
