By Adedapo Adesanya
Crude prices remained in the positive terrain on Wednesday, marking a ninth straight session of gains in which it reached pre-pandemic levels, driven by producers’ supply cuts and hopes that vaccine rollouts will drive a recovery in demand.
At the midweek trading session, the Brent crude gained 19 cents or 0.31 per cent to sell at $61.28 per barrel, while the United States’ West Texas Intermediate (WTI) rose by 13 cents or 0.22 per cent to trade at $58.49 per barrel.
The gain yesterday was further supported by an unexpected drop in the US crude stockpiles which dropped 6.6 million barrels, according to the Energy Information Administration (EIA) on Wednesday, compared with an expected 985,000-barrel increase forecast.
The American Petroleum Institute (API) had reported a draw in crude oil inventories of 3.5 million barrels for the week ending February 5 on Tuesday.
The drop in inventories in the largest consuming nation for the week ended February 5 was as a result of higher refining activity and lower imports.
The bullish market is also being supported by expectations for another large dose of fiscal stimulus by the US, with President Joe Biden calling for an aid package worth $1.9 trillion to boost recovery from the coronavirus pandemic.
However, in reality, a final package is expected to be announced which is lesser than the initial amount but closer to it than had previously been expected.
One cannot also overlook the impact of Saudi Arabia singlehandedly cutting its oil production in February and March, supplementing cuts agreed by other members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+.
In addition, coupled with the recent weakness in the US Dollar, they also act as strong pillars for the commodity to find its support.
However, the EIA, a monthly report released Tuesday, said it expects global consumption of petroleum and liquid fuels to rise by 5.4 million barrels per day this year, which is down by 200,000 barrels per day from the forecast given in January.
Others forecast that supply will undershoot demand in 2021 as more people get vaccinated and start going away on trips and working in offices once lockdowns are lifted and economic reorganisation commences.