By Adedapo Adesanya
The Brent crude jumped to $67 per barrel on Wednesday despite a surprising report that showed a build in crude inventories in the United States, the largest oil-producing country in the world.
During the trading session, the global benchmark, which many country use to price their crude, appreciated by 2.8 per cent or $1.85 to trade at $67.22 per barrel, while the US benchmark, West Texas Intermediate (WTI) crude, gained $1.78 or 2.9 per cent to sell at $63.45 per barrel.
Crude oil prices went on steroids after the Energy Information Administration (EIA) reported a crude oil inventory build of 1.3 million barrels for the week to February 19. The build was much lower than the one the American Petroleum Institute (API) had estimated a day earlier.
The report came a day after the API estimated an oil stock build of over 1 million barrels. It also compared with analyst expectations of a 5.372-million-barrel draw for the reported week and a 7.3-million-barrel inventory draw the EIA reported for the previous week.
Last week’s frigid weather in the American state of Texas will likely keep oil prices higher for some time as production restarts slowly, and reports suggest that some of it may not return at all as companies have decided to halt production.
The bullish sentiment around the black gold could be attributed to the renewal of hopes from banks and traders, especially after Goldman Sachs said it expected prices to hit $70 and top it by the summer.
Also, confidence that a meaningful demand rebound will accompany widening vaccination availability by soon has supported prices and the production outages in the US only served to strengthen it further.
Key players in the oil market have been talking up the rising prices in the coming months, with some even floating the prospect of $100 crude in the next year or two as the global economy recovers from the COVID-19 pandemic.
Still, market participants continue to observed events leading to next week’s meeting between the Organisation of the Petroleum Exporting and its allies (OPEC+).
This meeting, set for March 4, is likely to set the tone into the second quarter of the year as they decide on whether to bump up production or seek even higher prices before the pick-up in demand has started to fully materialize.
Back in December, the group decided to restore 500,000 barrels a day as part of the gradual process, which was paused in January, to push the remaining 7 million withheld barrels a day back into the market.
