Brent Nears $75 as Inventories Draw Shows Stronger Demand

July 28, 2021
Brent Price

By Adedapo Adesanya

Brent crude neared $75 per barrel on Tuesday as early reports show that there was a draw in crude oil inventories in the United States, the largest oil-producing country.

During the session, the price of the global crude oil benchmark hit $74.96 per barrel after it appreciated by 48 cents or 0.64 per cent, while the US West Texas Intermediate (WTI) traded at $72.17 per barrel when it rose by 52 cents or 0.73 per cent.

The American Petroleum Institute (API) reported a draw in crude oil inventories of 4.728 barrels for the week ending July 23, bringing the total 2021 crude draw so far to nearly 54 million barrels. Analysts had expected a loss of 3.433 million barrels for the week.

In the previous week, the API reported a surprise build in oil inventories of 806,000 barrels, compared to an expected draw of 4.333 million barrels.

This will be confirmed by the US Energy Information Administration (EIA) on Wednesday for further evidence that demand is holding up.

The draw in inventories reinforces expectations that demand will outstrip supply growth even amid a surge in COVID-19 cases.

Global oil markets are expected to remain in deficit despite a decision by the Organisation of the Petroleum Exporting Countries and allies (OPEC+) to raise their production through the rest of the year.

The highly infectious Delta variant of the coronavirus, which is a key threat, seems not to be shaking the market as expected as investors showed strong confidence in the commodity.

In the United States, there was a seven-day average for new cases, which rose to 57,126.

So far, oil futures have erased the sharp drop seen on July 19 following the OPEC+ agreement to raise production until 5.8 million barrels in existing output curbs are eliminated.

That drop, however, appeared to have little to do with the OPEC+ decision, analysts have said. Instead, it was driven largely by concerns about the spread of COVID cases.

The variant, if not contained, could prompt renewed business lockdowns that would jeopardize the outlook for a continued global economic recovery and rising demand for crude oil.

There is also confidence in the market as US shale producers appear to have maintained discipline with their production levels as they focus on returns rather than growth amid higher crude prices.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Leave a Reply

Stock Market Newspaper
Previous Story

Cautious Trading Sways Nigeria’s Stock Market Southwards

30-Day Treasury Bills Yield
Next Story

Naira Falls to N505/$1 at Black Market After CBN Action

Latest from Economy

Don't Miss