By Adedapo Adesanya
Oil prices further edged downwards on Tuesday on the back of a stronger Dollar and receding fears of oil supply disruption from Saudi Arabia after an attack on its oil facilities.
This moderated the price of the Brent crude by 1.48 per cent or $1.01 to $67.23 per barrel and softened the price of the United States’ benchmark, the West Texas Intermediate (WTI), by 1.92 per cent or $1.25 to $63.80 per barrel.
The Dollar Spot Index rose as much as 0.5 per cent, reducing the appeal for commodities such as oil that is priced in the currency.
Also, the market looked past an assault on a tank farm in the world’s largest exporter, Saudi Arabia, after the Kingdom said the attack was intercepted and oil output appeared to be unaffected.
On Monday, Brent crude oil price had risen above $70 a barrel after Yemen’s Houthi forces fired drones and missiles at the heart of the Saudi oil industry, including a Saudi Aramco facility at Ras Tanura vital to petroleum exports.
Since production and export capabilities did not affect supply as initially feared, the market has taken that as a cue for some profit-taking and went bearish.
Despite the current environment, oil has surged more than 30 per cent this year as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) policy on production proved effective amid recovering demand as economies emerged from the coronavirus crisis.
OPEC+ agreed last week to broadly stick with output cuts despite rising crude prices.
The market is also hopeful that President Joe Biden’s $1.9 trillion coronavirus aid package will provide enough resources to fuel a very strong economic recovery in the world’s largest economy.
Meanwhile, the country’s market continues to recover from the effects of the deep freeze that hit Texas and other parts of the country last month.
Seven of 18 refineries affected by the cold blast, representing over 2 million barrels a day of crude processing capacity, have returned to normal operations.
Modupe Gbadeyanka