Oil Prices Close Mixed Despite Drop in Crude Stocks

By Adedapo Adesanya

Prices of the major crude oil benchmarks were mixed at the market on Wednesday despite crude inventories in the United States dropping for the fifth straight week.

The Brent crude futures fell 21 cents or 0.46 per cent to trade at $45.65 per barrel, while the US West Texas Intermediate (WTI) crude futures gained 5 cents or 0.12 per cent to sell for $43.40 per barrel.

The market had performed well at the onset as both benchmarks settled at a five-month high on Tuesday. It was looking to extend this as data showed that oil stockpiles in the largest oil-producing nation fell by more than expected last week.

Oil inventory declined 4.7 million barrels, the Energy Information Administration (EIA) said. Expectations were for a draw of 3.7 million barrels after a decline of 1.6 million the previous week, marking the fifth straight week of declines.

Earlier, the American Petroleum Institute’s (API)’s weekly report showed crude inventory fell 4.5 million barrels, slightly ahead of expectations.

The reports come as Hurricane Laura continue to affect the US drilling and refining hub along the Gulf Coast, where producers have shut operations in preparation for the powerful storm.

Laura is now a catastrophic Category 4 hurricane, the National Hurricane Center said Wednesday. It is forecast to produce an unsurvivable storm surge, extreme winds and flash floods over some US cities.

Business Post gathered that nine oil-processing plants that convert nearly 2.9 million barrels per day of oil into fuel, and account for about 15 per cent of the country’s processing were shutting down.

Oil producers on Tuesday had evacuated 310 offshore oil facilities and shut 1.56 million barrels per day of crude output, about 84 per cent of Gulf of Mexico’s offshore production.

The pressure on prices came on renewed worries over the COVID-19 pandemic, which has squeezed demand and sent prices to a low level last witnessed about five months ago.

This dampened market sentiment after reports this week of patients being re-infected, raising fresh concerns about the novel virus.