By Adedapo Adesanya
Oil prices rose on Thursday, with the global crude benchmark, Brent, trading at $76.05 per barrel after it gained $1.41 or 1.75 per cent.
It was observed that this rise was influenced by tight supplies in the United States after shrinking to the smallest levels since January 2020.
As a result, the price of the country’s West Texas Intermediate (WTI) crude category rose by $1.23 or 1.7 per cent to sell at $73.62 per barrel.
There was a renewed optimism at the oil market yesterday as the decline in supply reported by the Energy Information Administration (EIA) on Wednesday suggested that demand levels remain strong.
The EIA said two days ago that the US crude inventories fell by 4.1 million barrels for the week ended July 23, marking the ninth weekly decline in 10 weeks.
Despite rising concerns around the rapid spread of the COVID-19 delta variant, both in the US, all around Asia and parts of Europe, analysts said rising vaccination rates would limit the need for the harsh lockdowns that gutted demand during the peak of the pandemic last year.
The market also gained support as US oil production has failed to make any meaningful gains over the last seven months.
In December, oil production averaged roughly 11 million barrels per day, while July’s production has come within 200,000-400,000 barrels per day of that figure and this is calming fears that production increases will outpace demand increases.
The market is now keeping an eye on COVID-19 developments, a possible uptick in oil supplies from Iran and Venezuela as sanctions are potentially reconsidered, and production plans from the Organisation of the Petroleum Exporting Countries (OPEC), which all have a strong pull on oil prices.
The dollar index fell on Thursday and lent support to the market. A weaker dollar can boost investor demand for dollar-denominated commodities, including crude oil.
Further supporting the outlook for tighter supplies was a statement from Iran blaming the US for a pause in nuclear talks, which could mean a delay in the return of Iranian barrels to the market.
Iran’s supreme leader, Ayatollah Ali Khamenei, declared that the oil producer would not accept America’s stubborn demands in talks to revive a 2015 nuclear deal.
On his part, the Joe Biden administration said it has been sincere and steadfast in pursuing a path of meaningful diplomacy to achieve a mutual return to compliance with the agreement.
