Crude Oil Market Flat Despite Drop in US Crude, Fuel Inventories
By Adedapo Adesanya
The crude oil market settled largely unchanged on Wednesday despite greater-than-expected draws in crude and fuel stockpiles in the United States.
Brent crude futures were up by 5 cents or 0.1 per cent to $84.99 a barrel, and the US West Texas Intermediate crude rose by 10 cents or 0.1 per cent to $80.61 a barrel.
The Energy Information Administration (EIA) reported a crude oil inventory draw of 3.7 million barrels for the week to March 31 compared with the preceding week’s draw of 7.5 million barrels, the agency said, adding that at 470 million barrels, inventories are about 4 per cent above the five-year average for this time of the year.
Although this would have pushed the market higher, the space is still reeling from the news of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) deciding to reduce oil production by another million barrels daily.
The biggest OPEC producers in the Middle East and several other members of the OPEC+ pact announced on Sunday a total of 1.16 million barrels per day of fresh production cuts.
Saudi Arabia will cut 500,000 barrels per day and said that the move was “a precautionary measure aimed at supporting the stability of the oil market.”
The voluntary production reductions include big cuts, beginning in May and lasting through the end of 2023.
Others who contributed to the cuts are OPEC members Iraq, the United Arab Emirates (UAE), Kuwait, Algeria, and Gabon, as well as non-OPEC Oman and Kazakhstan.
The market is also weighing worsening economic prospects against expectations of US crude inventory declines and the plans by OPEC+ producers.
The latest economic data from China and the United States has suggested a certain cooling in the rate of post-pandemic recovery, fueling worries about the prospects of oil demand later this year.
US job openings in February dropped to the lowest level in nearly two years, suggesting that the labour market was cooling.