Adedapo Adesanya
By Adedapo Adesanya
The Brent crude oil traded at $85.10 per barrel on Tuesday, November 9 after it appreciated by 32 cents or 0.38 per cent following the lifting of travel restrictions by the United States, putting to rest some pandemic fears just as supply remains tight globally.
Also, the price of the West Texas Intermediate (WTI) crude grade improved yesterday by 6 cents or 0.07 per cent to sell for $84.21 per barrel.
The US lifted restrictions on travel from a long list of countries including Mexico, Canada and most of Europe, allowing tourists to make long-delayed trips and family members to reconnect with loved ones after more than a year and a half apart because of the COVID-19 pandemic.
The decision allows fully vaccinated travellers at airports and land borders, doing away with a COVID-19 restriction that dates back to the administration of former President Donald Trump.
The new rules allow air travel from previously restricted countries as long as the traveller has proof of vaccination and a negative COVID-19 test.
Airlines are expecting more travellers from Europe and elsewhere and this proved bullish for the market.
Gains on Tuesday were mainly driven by a short-term outlook from the Energy Information Administration (EIA), which projected fuel prices would fall over the next few months.
The Joe Biden-led administration had said it would use price forecasts in the report to determine whether to release oil from the nation’s Strategic Petroleum Reserve (SPR).
Analysts said if the report had shown a huge rise in projected fuel prices, the Biden administration was likely to release lots of oil from the SPR quickly, which would have depressed prices.
However, that is projected to have only a short term effect on the market as a decision by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) to continue to add 400,000 barrels per day a month through June 2022 will continue to tighten the market.
Tightening global oil inventories have supported strong crude prices during the past several months, and the latest data from the American Petroleum Institute (API) reinforced the view that supply remains constrained.
According to market sources, API data showed US crude stocks declined by 2.5 million barrels for the week to November 5, more than analysts’ estimates for a 2.1 million build in crude stocks.
The market will be awaiting weekly inventory data from the EIA on Wednesday to see whether it confirms the drawdown in crude stocks.
