Adedapo Adesanya
By Adedapo Adesanya
Positive economic data and robust fuel consumption in the world’s largest oil consumer and producer of crude oil, the United States, triggered a rise in the price of the commodity on Thursday.
Brent futures rose by $2.94 or 3.1 per cent to settle at $96.59 a barrel while US West Texas Intermediate (WTI) crude rose by $2.39 or 2.7 per cent to settle at $90.50.
Prices rallied after another round of impressive US economic data boosted optimism for an improving crude demand outlook.
While recession fears and the possible demand destruction that could come with such a recession have pulled down prices over the last month, economic data in the US showed a stronger labour market, further bolstering crude prices.
The number of Americans filing new claims for unemployment benefits fell last week and the prior period’s data was revised sharply lower, suggesting labour market conditions remain tight despite slower momentum due to higher interest rates.
On Wednesday, the EIA estimated that crude oil inventories had fallen by 7.1 million barrels, on top of millions of barrels of crude oil making their way out of the nation’s Strategic Petroleum Reserves (SPR).
Fuel inventories in the country also fell by another 4.6 million barrels for the week ending August 12, the EIA reported on Wednesday.
US crude oil inventories, excluding those in the SPR, are now just 425 million barrels, 6 per cent below the five-year average. Fuel inventories are 8 per cent below the five-year average, and distillates are 23 per cent below the five-year average.
The EIA data also calmed fears that furl demand could be falling after it showed the four-week average of implied gasoline demand rose to the highest level this year.
Bans by the European Union on Russian oil exports could dramatically tighten supply and drive up prices in coming months as it could reach up to 2 million barrels per day.
The new secretary general of the Organization of the Petroleum Exporting Countries (OPEC), Mr Haitham Al Ghais at its next meeting in September, OPEC+, which includes other oil suppliers like Russia, “could cut production if necessary, we could add production if necessary. … It all depends on how things unfold.”
However, disappointing economic data out of China this week, which signifies lower crude demand from the world’s largest oil importer, has capped oil’s increase, as well as a stronger US Dollar, which makes crude oil more expensive for foreign buyers.
