Adedapo Adesanya
By Adedapo Adesanya
Oil prices fell by one per cent on Thursday, renewing worries as more coronavirus casualties were recorded in the United States, while investors weighed the outcome of an agreement to ease record supply curbs from next month.
Brent crude fell 49 cents or 1.12 per cent to $43.30 per barrel while the United States’ West Texas Intermediate (WTI) crude dropped 1.14 per cent or 47 cents to $40.37 per barrel.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, agreed on Wednesday to scale back oil production cuts from August, a decision that had produced a bullish reaction in the market previously.
However, fears of a second wave of cases of COVID-19, led by the United States, are keeping the rally in check with deaths crossing more than 600,000 worldwide.
The market will, however, hold on to hopes that production cuts in August and September would end up amounting to about 8.1 million – 8.3 million barrels per day, more than the headline number.
This is because countries such as Iraq and Nigeria which over-produced earlier this year would compensate with extra cuts in August and September.
This is in addition to the Energy Information Administration (EIA) confirming that US crude oil inventories had shed 7.5 million barrels in the week to July 10, after a build of 5.7 million barrels reported for the previous week.
The American Petroleum Institute (API) had estimated an inventory draw of as much as 8.3 million barrels a day earlier. Analysts had expected report of a crude oil inventory drop of 2.3 million barrels.
Inventory build-up means bad news as unwanted oil is not exactly what the market facing a comparative demand worry needs, as more oil will be released from next month than in the past three months.
The International Energy Agency Executive (IEA) Director, Mr Fatih Birol, however, said that global oil markets are slowly rebalancing, with prices of about $40 per barrel expected in coming months.
