By Adedapo Adesanya
Oil prices rose on Wednesday, with the Brent climbing above $75 per barrel, its highest since late 2018, after data showed crude inventories declined as travel picks up in the United States.
The global crude benchmark traded at $75.38 per barrel yesterday after it rose by 57 cents or 0.76 per cent, while the United States crude benchmark, West Texas Intermediate (WTI), gained 28 cents or 0.32 per cent to trade at $73.08 per barrel.
Official US government source, the Energy Information Administration (EIA), reported a crude oil inventory draw of 7.6 million barrels for the week to June 18 compared with a draw of 7.4 million barrels reported for the previous week and another draw of 7.2 million barrels the American Petroleum Institute (API) reported for the same week.
Analysts had expected the EIA to report a crude stock draw of 3.625 million barrels for the period.
The significant decline in the US crude stockpiles is coming as more people are getting back in their cars and fuelling transportation. This is showing up in the numbers which analysts noted is going to keep the upward pressure on prices.
Also adding to the bullish outcome was a weaker US Dollar, which boosted the price of crude, making it less expensive for buyers holding other currencies.
This renewed demand could mean the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) may return more oil to the market.
OPEC+, which meets on July 1, has reportedly been discussing a further unwinding of last year’s record output cuts from August but no decision has been made.
Global demand is set to rise further in the second half of the year, though OPEC+ also faces the prospect of rising Iranian supply if talks with world powers lead to a revival of Iran’s 2015 nuclear deal.
However, Iran said on Wednesday said the United States had agreed to remove all sanctions on Iran’s oil and shipping but the White House said “nothing is agreed until everything is agreed.”
The success of a US-Iranian talk is potentially bearish for oil as more barrels will enter the market. Analysts, however, hope that the growing demand will absorb the extra barrels and prices will not experience any major shock in the long run.
