By Adedapo Adesanya
The Brent crude neared $49 per barrel on Wednesday after it gained 12 cents or 0.25 per cent to trade at $48.96 per barrel despite a massive crude oil inventory build in the United States.
According to the Energy Information Administration (EIA), the US recorded an inventory rise of 15.189 million barrels for the week to December 4, after a modest draw of 700,000 barrels estimated for the previous week.
But despite this development, the price of the US oil benchmark, the West Texas Intermediate (WTI) crude, moved up by 0.04 per cent or 2 cents to trade at $45.63 per barrel.
The spike in the crude inventories came close to the largest crude build ever, which was recorded earlier this year for the week ending April 10, when the EIA reported a 19.25 million barrel inventory build.
Earlier, the American Petroleum Institute (API) had reported a crude oil stock build of just 1.1 million barrels.
According to analysts, the increase in the US crude inventories raised a sense of caution among investors and this prompted them to unwind long positions.
Investors are also keeping an eye on the US lawmakers’ efforts to approve a new economic stimulus package needed to drive jobs growth and energy demand, and Friday has been projected as a possible deadline to avoid a government shutdown.
Oil prices have reversed their recent rally this week as worries about the continuing rise in COVID-19 infections globally began to displace enthusiasm from positive vaccine news from earlier this month. Even the start of vaccinations in the United Kingdom did not arrest the slide.
Despite the vaccine development, several countries continue to struggle to contain the spread of coronavirus cases, with Germany and South Korea announcing new strict measures.
Also, the price of the commodity has been rising lately due to the move by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to continue to reduce production from next month. On January 4, 2021, the oil cartel is expected to hold its next policy-setting meeting.
