Tight Supplies, Weak Greenback Buoy Oil Prices
By Adedapo Adesanya
Oil prices rose about one per cent on Tuesday as traders worried about tight supplies and a weaker US Dollar, resulting in the price of the Brent crude rising by $1.08 or 1.0 per cent to $107.35 a barrel and the United States West Texas Intermediate (WTI) crude growing by $1.62 or 1.6 per cent to $104.22.
Prices were supported by supply fears due to Western sanctions on Russia, which could see more than three million barrels per day wiped off the supply market just as producers continue to underperform.
The US Dollar slid to a two-week low against a basket of other currencies, bolstering oil demand by making it less expensive for buyers using other currencies.
In a move that could pose a problem for supplies, Libya’s new National Oil Corp (NOC) chief Farhat Bengdara rejected challenges to his appointment and as work resumed at some shuttered fields and ports.
The North African producer will begin loading oil for export on Wednesday after the force majeure was declared lifted following an intense battle for control of the National Oil Company (NOC) last week.
Libya’s Government of National Unity (GNU), led by interim prime minister Mr Abdul Hamid Dbeibah, last week appointed the new chairman to replace long-time chairman Mr Mustafa Sanalla, who refused to step down when armed militias stormed the NOC headquarters.
A statement released said that two tankers would arrive at the ports of Zueitina and Sidra to load more than one million barrels of oil. The statement also said that an additional two tankers would arrive at the port of Ras Lanuf.
The American Petroleum Institute (API) reported a build this week for crude oil of 1.860 million barrels, while analysts predicted a build of 333,000 barrels.
The build comes as the Department of Energy released 5 million barrels from the Strategic Petroleum Reserves in Week Ending July 15, to 480.1 million barrels.
US crude inventories have shed some 61 million barrels since the start of 2021, with a 1.83 million barrel gain since the start of 2020, according to API data.
In the week prior, the API reported a build in crude oil inventories of 4.762 million barrels after analysts had predicted a draw of 1.933 million barrels.
On Wednesday, the US Energy Information Administration (EIA) will release the official government data to confirm whether there was a build or a drawdown.
Last week, US President Joe Biden visited top oil exporter Saudi Arabia, the de facto leader of the Organisation of the Petroleum Exporting Countries (OPEC), whose crude exports slipped in May to a four-month low at 7.050 million barrels per day.
Amid these, pressures remain that global central banks in efforts to tame inflation stoked fears that a potential recession could cut energy demand.