Crude Oil Prices Rise on Strong Demand

By Adedapo Adesanya

Crude oil prices received rose on Wednesday after the Energy Information Administration (EIA) reported an inventory draw of 4.1 million barrels for the week to July 23, confirming a strong demand.

Brent crude traded at $74.60 per barrel after gaining 12 cents or 0.16 per cent, while the West Texas Intermediate (WTI) appreciated by 61 cents or 0.85 per cent to trade at $72.26 per barrel.

The inventory draw of 4.1 million barrels recorded for the week was higher than the build of 2.1 million barrels reported for the previous week.

The American Petroleum Institute (API) had reported a draw of 4.728 million barrels for the week to July 23.

Analysts had expected the EIA to report a crude oil inventory draw of 3.43 million barrels for the week to July 23.

The development brought the market’s focus back to tight supplies rather than rising COVID-19 infections.

However, concerns that renewed restrictions tied to the spread of the coronavirus Delta variant will lead to less fuel demand helped set a limit to oil’s price rise. Cases worldwide have started to rise after largely falling in May and June as the new variant continues to sway over the market.

Britain reported its highest number of deaths and people in hospital with coronavirus since March with Prime Minister Boris Johnson urging caution despite a week of lower reported numbers of infections.

Oil has risen close to 50 per cent this year, helped by demand recovery and supply curbs by the Organisation of the Petroleum Exporting Countries and allies (OPEC+).

OPEC+ agreed to increase supply by 400,000 barrels per day from August, unwinding more of last year’s record supply cut, but this is seen as too low by some analysts given the rebound in demand expected this year.

However, signals of economic recovery in the US added to the bullish outcome as the Federal Reserve said on Wednesday in a new policy statement that remained upbeat and flagged ongoing talks around the eventual withdrawal of monetary policy support.

It also said it would continue buying large quantities of government debt, but suggested that it could slow those purchases before long if the economy continues to strengthen.