Crude Prices Rise 1% on US Lower Fuel Inventories
By Adedapo Adesanya
Prices of the crude oil grades rose about 1 per cent on Thursday after posting the biggest two-day loss for the start of a year in three decades.
Brent crude futures settled higher at 96 cents or 1.2 per cent to close at $78.80 a barrel, while the US West Texas Intermediate (WTI) crude went up by 96 cents or 1.3 per cent to $73.78 a barrel.
The change of fortune happened as US data showed lower fuel inventories in the final week of 2022, a development that provided support amid a crude oil inventory build of 1.7 million barrels for the week to December 30.
This compared with a modest build of 700,000 barrels for the previous week, which in turn followed a weekly draw of 5.9 million barrels.
The US Energy Information Administration (EIA) said that at 420.6 million barrels, crude oil inventories were still below the seasonal five-year average by about 4 per cent.
A day earlier, the American Petroleum Institute (API) estimated a crude oil inventory build of close to 3.3 million barrels, citing refinery shutdowns that took about 1 million barrels daily in refining capacity offline.
Big declines in the previous two days were driven by worries about a global recession, especially following weak short-term economic signs in the world’s two biggest oil consumers, the United States and China.
Also supporting prices was a possible supply disruption after a top US pipeline operator, Colonial Pipeline, said its Line 3 had been shut for unscheduled maintenance, with a restart expected for the products line on January 7.
The market will continue worrying about the market economy. Figures showed US manufacturing contracted further in December, pressured prices, as did concerns about economic disruption as COVID-19 cases worsened in China following the lifting of strict curbs on travel and activity.
The International Monetary Fund (IMF) has also forecast that a third of the world’s economies could sink into recession this year, and central banks signalled that they have no plans to change their aggressive approach to inflation control.