Brent Nears $80 on Another US Crude Inventory Draw

By Adedapo Adesanya

The price of the Brent further rose on Wednesday and moved closer to $80 as data from the Energy Information Administration (EIA) showed an inventory draw of 3.6 million barrels for the week to December 24.

Yesterday, the value went up by 30 cents or 0.24 per cent to trade at $79.47 per barrel, while the United States West Texas Intermediate (WTI) crude rose by 37 cents or 0.28 per cent to sell at $76.84 per barrel.

At 420 million barrels, crude oil inventories remain 7 per cent below the five-year average—compared to 8 per cent below the five-year average last week.

On Tuesday, the American Petroleum Institute (API) estimated a crude oil inventory draw of 3.09 million barrels for the week to December 24.

Oil prices, however, remain under pressure from concerns about the new coronavirus strain, Omicron, which has triggered fresh restrictions in certain countries.

China, the world’s biggest oil importer, reported 207 new confirmed coronavirus cases and 27 new asymptomatic cases but with no new deaths.

The average number of daily confirmed coronavirus cases in the US hit a record high of 258,312 over the last seven days while Australian cases hit a new record of more than 19,000 daily infections.

Although the surge in COVID-19 cases is expected to temporarily slow, it may affect the recovery in oil demand that is underway with forecast trimming oil demand for this year and next to reflect risks and uncertainty brought on by the variant.

Supporting the market was news that the governments around the world were trying to limit the impact of record numbers of new COVID-19 infections on economic growth by easing testing rules and narrowing who needs to isolate as close contacts of positive cases.

Oil prices have been supported by producers like Nigeria, Ecuador, and Libya declaring forces majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns.

Russian Deputy Prime Minister, Mr Alexander Novak said that the Organisation of the Petroleum Exporting Countries and allies (OPEC+) has resisted calls from the US to boost output because it wants to provide the market with clear guidance and not deviate from the policy on gradual increases to productions.

The group is meeting on January 4 to decide whether to proceed with a planned production increase of 400,000 barrels per day in February.