Adedapo Adesanya
By Adedapo Adesanya
Crude oil prices fell for the second consecutive session on Wednesday as the US Dollar strengthened and government data showed a surprise jump in stockpiles.
Brent crude futures shed 16 cents or 0.2 per cent to settle at $86.09 a barrel, and the US West Texas Intermediate (WTI) crude futures dropped 27 cents or 0.3 per cent to trade at $81.35 a barrel.
A stronger US Dollar weighed on oil, with the US dollar index gaining for a second consecutive session.
A rising greenback makes Dollar-denominated oil more expensive for holders of other currencies, dampening demand since the commodity is priced in the US currency.
Also, the Energy Information Administration (EIA) reported an inventory build of 3.2 million barrels for the week ended March 22 versus a draw of 2 million barrels for the previous week, when the EIA also estimated a sizeable draw in gasoline (petrol) inventories, which helped support prices.
This week, the American Petroleum Institute (API) inventory report, which came out on Tuesday, pushed prices lower as it estimated an inventory build in crude oil of over 9.3 million barrels for the week closed March 22.
The Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, are unlikely to change oil output policy until a full ministerial gathering in June, ahead of next week’s meeting to review the market and members’ implementation of output cuts.
OPEC+, this month, agreed to extend output cuts of about 2.2 million barrels per day to the end of June, although Russia and Iraq have had to go to extra lengths to tackle over-production.
Earlier this week, Russia’s government ordered companies to reduce oil output in the second quarter to ensure they meet a production target of 9 million barrels per day by the end of June in line with its pledges to OPEC+.
This came weeks after Russian Deputy Prime Minister, Mr Alexander Novak said that Russia would cut its oil output and exports by an additional 471,000 barrels per day in the second quarter, in coordination with some OPEC+ members.
Market analysts noted that there are expectations of a slightly tighter market in the second quarter, given OPEC+’s voluntary cuts are being extended.
