Adedapo Adesanya
By Adedapo Adesanya
Both the Brent and the United States’ West Texas International (WTI) crudes faced south on Wednesday despite a drop in crude inventories in the US.
The Brent crude was down 24 cents or 0.53 per cent at $45.22 per barrel, while the WTl lost 8 cents or 0.55 per cent to trade at $42.81 per barrel.
Both futures had risen when the Energy Information Administration (EIA) reported that crude oil inventory fell by 1.6 million barrels compared with a draw of 4.5 million barrels for the previous week, the third weekly laggard in a row.
However, the strongest factor facing the market caused prices to drop. Concerns about fuel demand while global producers feared a second prolonged wave of the coronavirus pandemic continued to prove as a major risk for the market recovery.
Oil started the week with a rise on the back of reports that China was planning to ramp up oil imports from the United States but the budding rally ended soon amid doubts that the US economy was recovering as quickly and consistently as it should be.
On top of that, the Organization of the Petroleum Exporting Countries and its allies, OPEC+ met on Wednesday to discuss the progress of its production cut deal and future plans, adding a new angle of uncertainty.
Even though no surprise news is expected to come out of this meeting, it could tell traders how the deal is going and whether internal agreement remains robust.
OPEC+ boasted record compliance in July, at a combined 94-97 per cent, according to surveys.
OPEC+ sources have said the group was unlikely to change on Wednesday its output policy, which currently calls for reducing output by 7.7 million barrels per day versus a record high 9.7 million barrels per day up until this month.
It was projected that global oil demand should recover to pre-pandemic levels as soon as the fourth quarter, the Saudi Energy minister, who also chairs the meeting, said while urging compliance to all 23 member nations to the global deal to cut output.
