Oil Rises as US Fuel Consumption Outweighs OPEC+ Stalemate

By Adedapo Adesanya

Oil prices rose on Friday fuelled by strong US fuel consumption data as the market overlooked the uncertainty about an oil production deal.

Brent crude gained $1.43 or 1.93 per cent to trade at $75.55 per barrel while the US West Texas Intermediate (WTI) gained $1.62 or 2.22 per cent to settle at $74.56 per barrel.

As summer driving season heats up, fuel consumption figures in the US reached their highest level since 2019, and the crude inventory report from the Energy Information Administration (EIA) helped oil prices back.

Crude inventories fell by 6.9 million barrels in the week to July 2 to 445.5 million barrels, the lowest since February 2020

Prices have been volatile in recent days, following an ongoing standoff among members of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) over production hikes.

While the Joint Ministerial Monitoring Committee (JMMC) of the cartel still has to decide on a new official meeting, behind the scenes, high-placed Russian and US officials are said to have talked to convince both camps of a reasonable output hike.

Major producers Saudi Arabia and the United Arab Emirates, two Gulf OPEC allies, are at odds over a proposed deal that would have brought more oil to the market.

Before talks broke down on Monday, Saudi Arabia proposed that the coalition gradually revive 5.8 million barrels of daily capacity in monthly instalments of 400,000 barrels through to the end of next year.

However, the UAE blocked an agreement, saying it will only support an extension of the pact if there are revisions to its own quota, which the country contends is outdated.

Meanwhile, the World Health Organization (WTO) has urged caution on reopenings worldwide as the delta variant of COVID-19 spreads.

With new restrictions on visits implemented in Hong Kong, Spain, and Portugal in recent days, new flareups in cases have occurred in the UK and Australia, among other places as analysts warned that the virus variant could pose some oil demand risks.