By Adedapo Adesanya
The price of Brent depreciated by 3.1 per cent or $2.62 on Wednesday to $82.84 per barrel after a United States government data showed big builds in crude oil stockpiles.
Also, the US West Texas Intermediate (WTI) fell by 3.1 per cent or $2.46 to $76.41 per barrel as the Energy Information Administration (EIA) stated that the country’s oil and fuel inventories rose last week to their highest levels since June 2021, with demand remaining weak.
Crude inventories climbed 4.1 million barrels in the week ending January 27 to 452.7 million barrels. This was the sixth straight weekly build, as refining utilization declined and net imports climbed.
Also, the Federal Reserve raised its target interest rate by a quarter of a percentage point on Wednesday, also promising “ongoing increases” in borrowing costs as part of its still unresolved battle against inflation.
The US central bank said in a statement that inflation has eased somewhat but remains elevated, marking an explicit acknowledgement of the progress made in lowering the pace of price increases from the 40-year highs hit last year.
This overshadowed some bullish news, including a weakening US Dollar. The US Dollar last fell 0.9 per cent on the day against a basket of currencies at 101.19.
Ministers from the Organisation of the Petroleum Exporting Countries (OPEC) and allies, OPEC+, including Russia, kept their output policy unchanged on Wednesday.
OPEC’s oil output fell in January, as Iraqi exports dropped and Nigerian output did not recover, with the 10 OPEC members pumping 920,000 barrels per day below OPEC+ targeted volumes.
The shortfall was bigger than the 780,000 barrels per day deficit in December.
Meanwhile, both Europe and the US are bracing for the upcoming EU embargo on Russian fuels, which comes into effect on February 5. The embargo will probably feature a set of price caps for fuels that sell at a premium to crude and for those that normally trade at a discount to crude.
Expectations are that the embargo will tighten the sully of fuels even though European buyers stocked up n as much Russian diesel as they could get their hands on in the past few months.
Replacement supply could come from the Middle East, India, and China, but it will take a while for it to reach its destinations.
