Adedapo Adesanya
By Adedapo Adesanya
The oil market climbed by almost 3 per cent on Wednesday as the second straight weekly draw from crude stockpiles in the United States was bigger than expected.
This development raised the price of Brent by 2.5 per cent or $1.77 to $74.03 a barrel, as the price of US West Texas Intermediate (WTI) appreciated by 2.8 per cent or $1.86 to $69.56 a barrel.
Crude oil prices moved higher after the US Energy Information Administration (EIA) reported an inventory draw of 9.6 million barrels for the week to June 23, compared with an inventory decline of 3.8 million barrels for the previous week that, despite its relatively large size, failed to move prices much.
This took the market away from expectations of more rate hikes by central banks which were reinforced earlier this week.
The president of the Central European Bank (ECB), Ms Christine Lagarde, was the latest one to do the reinforcing by saying in a speech Tuesday that inflation remained stubbornly high and central banks were not done with the hikes.
She then proceeded to warn of another ECB hike coming next month.
Just like the US central bank chair, Mr Jerome Powell, did not rule out further hikes at consecutive Fed meetings.
Investors remained cautious that these interest rate hikes could slow economic growth and reduce oil demand.
Analysts expect the market to tighten in the second half, citing ongoing supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, OPEC+, and Saudi Arabia’s voluntary reduction for July.
In China, the world’s second-biggest oil consumer, annual profits at industrial firms extended a double-digit decline in the first five months as softening demand squeezed margins.
This reinforced hopes of more policy support for a post-COVID economic recovery that hasn’t performed as expected.
This has since prompted S&P Global, Goldman Sachs and other global agencies to bring down their China growth forecasts for this year in recent weeks.
