By Adedapo Adesanya
Crude oil prices moved lower after reaching the $90 mark on Wednesday as the Energy Information Administration (EIA) reported a crude oil inventory build of 2.4 million barrels.
The Brent crude reached $90 yesterday for the first time since 2014, adding to oil’s blistering recovery since its pandemic-era lows in April 2020.
The threshold breakthrough came amid growing geopolitical tensions between Russia and Ukraine, and supply remains tight amid a rebound in demand.
However, the market went downwards towards the end of the day after the US oil industry watchdog revealed that the crude oil inventories rose by 2.4 million barrels during the week ended January 21.
This happened as analysts expected an increase of just 150,000 barrels compared with a modest build of half a million barrels for the previous week.
US crude oil inventories have been on the decline for several weeks now but an uptick drove prices downward.
Consequently, the Brent ended the session at $89.32 per barrel after losing 71 cents or 0.64 per cent while the price of the West Texas Intermediate (WTI) fell by 58 cents or 0.66 per cent to $86.77 a barrel.
Despite the fall recorded at the midweek session, analysts say potential sanctions on Russia, which would be triggered by a Ukraine invasion, would be a catalyst for higher crude prices.
Also, there is also growing worry about a global undersupply of crude oil, which is also helping keep prices higher, with forecasts for Brent topping $100 per barrel later this year multiplying.
The Organisation of the Petroleum Exporting Countries (OPEC) and its oil-producing allies, OPEC+ have been returning crude to the market, but the group’s been unable to ramp up production to hit its targets.
The OPEC+ group is expected to decide next week whether it should continue unwinding the oil production cuts by another 400,000 barrels per day in March, as global demand holds resilience despite record COVID cases in major oil-consuming countries.
The alliance is meeting online on February 2 to decide on production levels and quotas for March, having approved 400,000 barrels per day monthly production hikes each month since August.
Meanwhile, US shale oil growth has slowed, and the omicron variant hasn’t affected demand as was initially expected.
