By Adedapo Adesanya
The Brent crude oil grade depreciated further on Wednesday by 1.9 per cent or $1.89 to $98.02 per barrel as traders reacted to progress in Russia-Ukraine peace talks and a surprise increase in crude inventories in the United States.
Also, the price of the US West Texas Intermediate (WTI) grade declined during the session by 1.5 per cent or $1.40 to trade at $95.04 per barrel.
Business Post reports that Brent has dropped more than $40 after it jumped past $139 a barrel on worries about extended disruption to Russian supply following the country’s invasion of its neighbour, Ukraine which has seen the US and other nations slap heavy sanctions on it, thus affecting its economy.
In the last six days, Brent has seen close to a 25 per cent drop driven by many factors including the modest hopes of a Russia-Ukraine peace agreement.
On Ukraine’s end, it said the positions of Ukraine and Russia were sounding more realistic, but time was needed while Russia’s foreign ministry said some deals with Ukraine were close to being agreed upon.
Meanwhile, the International Energy Agency (IEA) noted that should the war continue, more supplies will be disrupted.
The Paris-based agency warned that three million barrels per day of Russian oil and products may not find their way to market beginning in April as sanctions bite and buyers hold off.
The IEA also said demand will fall, but not by as much as the potential drop in Russian supplies.
Also, faint signals of progress between the United States and Iran to resurrect a 2015 deal that would allow the Islamic Republic to export oil if it agrees to limit its nuclear ambitions is also checking this.
Prices were also pressured by the latest demand scare after China reported a spike in new COVID-19 infections and locked down one of its biggest industrial hubs, Shenzhen.
The decline in traffic in both cities has market participants and analysts concerned about the potential threat to oil demand in the world’s largest crude oil importer.
Crude oil prices also went lower after the US Energy Information Administration (EIA) reported an inventory build of 4.3 million barrels for the week to March 11 compared with the draw of 1.9 million barrels for the previous week.
Earlier, the American Petroleum Institute (API) had reported an estimated inventory build of 1.867 million barrels for the week to March 11.
Dipo Olowookere