By Adedapo Adesanya
Brent crude returned to the $44 per barrel region on Tuesday following expectations of positive data on US crude inventories and fear of instability as explosions rocked Middle Eastern country, Lebanon.
The international benchmark rose by 18 cents or 0.41 per cent yesterday to trade at $44.33 per barrel, while the US West Texas Intermediate (WTI) crude gained 52 cents or 1.27 per cent to trade at $41.53 per barrel.
The American Petroleum Institute (API) reported on Tuesday a draw in crude oil inventories of 8.587 million barrels for the week ending July 31.
Analysts had predicted a modest inventory draw of 3.267 million barrels.
In the previous week, the API reported a significant and unexpected draw in crude oil inventories of 6.829 million barrels after analysts had predicted a small build.
The market will, however, be looking at the more closely watched data from the Energy Industry Administration (EIA) which is due Wednesday morning.
Analysts are expecting inventories data from the EIA to show a fall of 4.1 million barrels.
According to the group, US crude inventories fell 10.6 million barrels last week, the largest drop of the year.
Also, investors were on the lookout as an explosion rocked Lebanon’s main port in the capital Beirut, stoking fears over instability in the region.
Footage showed what appeared to be a fire, followed by crackling lights and then a larger explosion as an enormous cloud of smoke engulfed the area around the Port of Beirut. Authorities said it was caused by highly explosive materials at the port, but didn’t immediately say whether it was an accident or an attack.
Meanwhile, worries remain about overall demand as the COVID-19 pandemic continues. The global tally of confirmed cases climbed above 18.3 million on Tuesday.
In addition, the market is also weighing the relaxation of curbs on output by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, which has continued to shadow the market, analysts said.
OPEC+ pledged to cut output by 9.7 million barrels a day beginning in May, easing to 7.7 million barrels a day this month and running through the end of the year.
Countries that exceeded the earlier curb are supposed to further curtail output, which means output is targeted to rise by around 1.5 million barrels a day beginning this month, though sceptics doubt that past laggards such as Iraq and Nigeria in the agreements will fully comply.
Dipo Olowookere