By Adedapo Adesanya
Brent crude sold for $75.46 per barrel, its highest levels since late July, on Wednesday after it appreciated by $1.86 or 2.5 per cent as early reports show there was a greater draw in crude oil inventories in the United States, the largest oil-producing country.
Also, this development jerked the price of the US West Texas Intermediate (WTI) crude higher by $2.15 or 3.1 per cent to $72.61 per barrel during the session, its highest since early August.
The US Energy Information Administration reported a 6.4 million barrels draw in crude oil inventories and another draw in fuel inventories.
A week earlier, the EIA had estimated a modest 1.3 million barrels decline in crude oil inventories but a sizeable draw in fuel pushed prices higher, signalling that strong demand has not faltered amid the latest surge in COVID-19 infections.
For the week to September 10, the EIA reported another draw in gasoline inventories, at 1.9 million compared to a draw of 7.2 million barrels a week earlier.
Before the EIA reported inventory moves, the American Petroleum Institute (API) had estimated crude oil stocks had shed close to 4 million barrels, pushing prices higher. Since the start of the year, according to API numbers, US crude oil stocks have declined by 70 million barrels.
Meanwhile, market analysts noted that production is set to rise as the inventory of drilled but uncompleted wells in the US shale patch declines. This should not be a problem for prices since demand is strengthening at a similar pace.
The data follow the International Energy Agency’s warning that recent supply loss from storms in the Gulf has offset what the Organisation of Petroleum Exporting Countries and allies (OPEC+) has added to the market and the world will have to wait until October for more barrels.
Meanwhile, the latest analysis from the group shows a looming supply crisis in the summer of 2022.
OPEC’s analysts now see global oil demand increasing by 4.15 million barrels a day in 2022, compared to the level expected for this year, an upward revision of 860,000 barrels a day from what they forecast a month ago.
Prices have also gained due to the storms in the Gulf of Mexico as the slow recovery in natural gas production that has sent those prices rallying may prompt power producers to use petroleum products such as fuel oil to run as feedstock in their plants.
