By Adedapo Adesanya
The oil market dropped by almost 4 per cent on Wednesday, extending the previous session’s sharp losses, as recession shadowed a report that showed US crude inventories fell more than expected.
Brent crude settled at $77.69 a barrel after losing $3.08 or 3.8 per cent, while the U.S. West Texas Intermediate crude settled at $74.30 a barrel after shedding $2.77 or 3.6 per cent.
The Energy Information Administration (EIA) reported an inventory draw of 5.1 million barrels for the week to April 21 compared with another draw of 4.6 million barrels for the previous week and an estimated 6-million-barrel inventory decline for the week to April 21, as reported by the American Petroleum Institute (API).
The EIA also reported a decline in gasoline inventories and a smaller draw in middle distillate inventories for the week to April 21.
However, as recession fears remained in the world’s largest economy, the US, following weak consumer data and a banking crisis, the market saw selloffs.
Investors also are concerned that potential interest rate hikes by central banks to fight inflation could slow economic growth and dent energy demand in the US, the United Kingdom and European.
The US Federal Reserve, the Bank of England and the European Central Bank are all expected to raise rates at their coming meetings.
Oil prices have erased all their gains since the Organisation of the Petroleum Exporting Countries (OPEC) and producer-allies, OPEC+, announced in early April an additional output reduction until the end of the year.
Russian Deputy Prime Minister, Mr Alexander Novak, said on Wednesday that OPEC+ remains an efficient tool for coordination on global oil markets.
Mr Novak said the group was not regulating oil prices but rather was closely watching the balance of supply and demand.
“We do not say that we regulate prices. It is very important that we are talking about the need for a balance of interests between exporters and consumers,” Mr Novak said.
He said that around 20 per cent of Russia’s total oil exports had been rerouted from Europe to other markets, mainly India and China, adding that Russia has also cut around a third of gas supplies to the European Union.
