By Adedapo Adesanya
The prices of the two major crude oil benchmarks rose by more than $2 on Wednesday after data showed a larger-than-expected draw in US crude stockpiles amid unfair weather in the United States.
Brent crude futures were up by $2.21 or 2.76 per cent to settle at $82.20 a barrel, while the US West Texas Intermediate (WTI) crude futures gained $2.06 or 2.7 per cent to close at $78.29 per barrel.
US crude inventories fell by 5.89 million barrels, according to data from the US Energy Information Administration (EIA), compared with estimates for a drop of 1.66 million barrels. Data from the American Petroleum Institute (API) on Tuesday showed a 3.1 million barrel draw in the week to December 16.
At 418.2 million barrels, US crude oil inventories remain some 7 per cent below the five-year average for this time of the year.
The latest draw follows a weekly addition of 10.2 million barrels for the previous week—one of the biggest weekly increases in inventories this year.
In petrol, the EIA estimated an inventory build of 2.5 million barrels for the week to December 16, which compared with a build of 4.5 million barrels for the previous week, while production averaged 9.6 million barrels daily, which compared with 9.2 million barrels daily for the previous week.
Oil prices have been on the mend this week, buoyed by a forecast for freezing weather in the United States, the White House’s plan to start buying crude to replenish the strategic petroleum reserve after the biggest draw from it in history, and China’s expected demand recovery.
A slump in the US dollar also helped oil prices on their way up this week as a cheaper dollar makes oil more affordable for buyers in other currencies as well.
Markets also awaited clarity on when the Keystone pipeline, a major artery ferrying Canadian crude to the United States, would restart after TC Energy said it had removed the ruptured segment of the pipeline that caused an oil spill earlier this month and sent it for testing as directed by US regulators.
Prices were also boosted by hopes that China would relax some COVID-19 curbs after no new COVID-19 deaths were reported.
Meanwhile, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, said on Tuesday that the heavily criticised move by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to cut oil output turned out to be the right decision.
Analysts said that the comments suggest that OPEC+ may continue to keep supply tight.
