By Adedapo Adesanya
Crude oil prices returned bullish on Wednesday after the United States Energy Information Administration (EIA) reported a crude oil inventory draw of 4.8 million barrels for the week to February 4.
The agency said US crude stocks fell by 4.8 million barrels last week to 410.4 million barrels, their lowest since October 2018, while overall product supplied, a proxy for demand, hit a record 21.9 million barrels per day over the past four weeks, government data showed.
A day earlier, the American Petroleum Institute (API) surprised the market with an inventory draw.
The draw, estimated by the EIA compared with an inventory decline of 1 million barrels for the previous week. Inventories remain below the seasonal five-year average supporting higher oil prices.
This supported the lifting of the Brent crude price by 77 cents or 0.9 per cent to $91.52 per barrel as the United States West Texas Intermediate crude rose by 30 cents or 0.5 per cent to $89.66 a barrel.
At the previous session, the market was pressured by the headway in talks between the US and Iran on its nuclear programme which hit a snag last year. This signalled that an agreement when reached could allow more oil export from the Middle East producer.
The deal could return more than 1 million barrels per day of Iranian oil to the market, boosting global supply by about 1 per cent and its legitimacy would bring relief to the tight oil market and to rallying oil prices.
This is coming at a time when the market is concerned about spiking geopolitical tensions in the United Arab Emirates (UAE), which has been hit by attacks from Yemen’s Houthi group, and over Russia due to the presence of thousands of its troops near Ukraine’s border.
The President of France, Mr Emmanuel Macron said steps could be taken to de-escalate the Russia-Ukraine crisis after a meeting with Russian President Vladimir Putin and called on all sides to stay calm.
To tackle the high prices, the US Biden administration responded to high prices by again stating this week that it has been talking with large producers about more output.
This is as well as the possibility of additional strategic releases from large consumers, as it did late last year – which didn’t move the market much due to recovery from the Omicron scare.
President Joe Biden and King Salman of Saudi Arabia spoke on Wednesday, which included a discussion of maintaining stable global energy supplies.
Dipo Olowookere