By Adedapo Adesanya
Oil prices rose on Wednesday on the back of a drop in the US crude inventories, but another record day for coronavirus cases worldwide kept gains in check.
Brent crude futures gained 56 cents or 1.3 per cent to trade at $43.78 per barrel and the US West Texas Intermediate (WTI) crude futures rose 25 cents or 0.61 per cent to $41.29 per barrel.
Investors at the oil market were delighted as US crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said. This marked their largest drawdown since last December.
The market also got push as net US crude imports fell 1 million barrels per day to 1.9 million barrels per day, according to the EIA data.
Another industry group, the American Petroleum Institute (API) announced its forecast of a decline in US crude oil inventories by 6.8 million barrels for the week ending July 24.
The fall in crude stocks was likely a result of supply cuts by the Organization of the Petroleum Exporting Countries and its allies, OPEC+ which were agreed-upon in April, finally being realized. A deal which despite not fully committing to had some companies close the tap on production.
While this signalled that US oil consumption could have increased, it also calmed some investors’ fears amid the increasing glut of oil supply on the global market.
On the demand side, however, the rising number of novel coronavirus (COVID-19) cases throughout the world is negatively impacting the global economic outlook and overall oil demand, thus keeping downward pressure on prices.
The total number of COVID-19 cases in the world has surpassed 16.7 million, according to the latest data from Johns Hopkins University on Thursday.
The US continues to lead with the most cases at 4.3 million, followed by Brazil with almost 2.5 million cases, while India has the third-highest with more than 1.5 million cases.
In the US, Six states reported one-day records for coronavirus deaths on Tuesday and Texas cases passed the 400,000 mark.
Also, attempts to provide relief amid the outbreak were in disarray after Republicans in the United States on Tuesday disagreed over their own plan for providing $1 trillion in new coronavirus aid.
As OPEC+ states get ready to start reducing their cuts from August, analysts warn that with the virus spreading across the Americas, Europe and Asia, worrying signs of a second surge in cases could dent balance.
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