By Adedapo Adesanya
An unexpected fall in US crude inventories on Wednesday triggered a rise in the prices of major benchmarks by more than four per cent at the energy market.
Brent crude rose $1.80 or 4.44 per cent to $42.33 per barrel. The global benchmark had traded below $40 per barrel for most of last week and early this week.
On its part, the United States West Texas Intermediate (WTI) crude settled higher by $1.95 or 5.09 per cent to $40.23 per barrel yesterday.
Crude inventories in the largest producer fell by 4.4 million barrels to 496 million barrels for the week ended September 11, according to the Energy Information Administration (EIA) on Wednesday.
That was lower than expectations from the American Petroleum Institute (API), another industry group which had reported a drop of 9.5 million barrels.
The market had fallen at the preceding session caused by worries that the demand outlook, driven by the pandemic, continued to limit crude’s recovery backed up by data from the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).
Another hurricane, known as Sally, also added to gains of the commodity at the midweek as more than a quarter of offshore output was shut on the US Gulf Coast.
Nearly 500,000 barrels per day offshore crude oil production was taken offline. This was about one-third of the shut-ins caused by Hurricane Laura in August.
Despite the latest positive position of the market, prices have reached months low in September, pressured by rising coronavirus cases and concerns about demand.
With almost 30 million coronavirus cases on record and daily spikes across Europe and Asia, demand has been impacted as backed by energy group data.
A panel of OPEC+ oil ministers will meet to review the supply pact on Thursday and is unlikely to recommend further output curbs despite the price drop, according to market analysts. They will probably work on ensuring compliance from lagging member countries in line with current output cuts of 7.7 million barrels per day that will run till December.
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