By Adedapo Adesanya
The price of the Brent crude oil appreciated by more than 4 per cent or $2.61 on Wednesday as more positive news led by a drop in United States inventory and fresh positive expectation over oil demand boosted optimism about returning demand for crude.
During the trading day, the value of the commodity increased to $66.28 per barrel, while the price of its counterpart, the West Texas Intermediate (WTI) crude, rose by 4.9 per cent or $2.97 to $63.15 per barrel.
According to the Energy Information Administration (EIA), the US crude inventories fell by 5.9 million barrels last week, exceeding analysts’ forecasts of a 2.9 million barrels drop. In the preceding week, the agency reported an inventory draw of 3.5 million barrels.
The EIA’s inventory estimate comes a day after the American Petroleum Institute (API) reported a 3.6 million barrels inventory draw in crude oil for the same period.
Oil also found support based on a report from the International Energy Agency (IEA) that predicted global oil demand and supply were set to rebalance in the second half of the year. It added that producers may then need to pump an additional 2 million barrels per day to meet the expected demand.
The Paris-based agency noted that the global oil demand will grow 230,000 barrels per day faster than previously forecast.
World oil demand is now expected to expand by 5.7 million barrels per day in 2021 to 96.7 million barrels per day following a collapse of 8.7 million barrels per day last year, the IEA said.
This is coming a day after the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday raised its global demand forecast by 70,000 barrels per day from last month’s forecast and now expects global demand to rise by 5.95 million barrels per day in 2021.
Despite the stronger global economic indicators, the IEA said the recovery remains fragile given rising COVID-19 cases in some key countries and regions including Europe, India and Brazil.
Even with a wave of new lockdowns in Europe, the agency said it remains confident that the region’s vaccination program will accelerate in the coming months allowing for a boost in mobility in the second half of the year
The market is still concerned over near-term fuel demand as a result of surging COVID-19 cases in some major consuming countries, and now the news that vaccinations with Johnson & Johnson may be suspended temporarily because of rare blood clotting problems in several patients are also weighing on oil prices.
