Crude Oil Market Finally Wake Up

By Musa Sunusi Ahmad

Oil prices ticked higher on Thursday, although gains were limited by a surprise increase in U.S. crude oil reserves as the coronavirus pandemic hit fuel consumption.

U.S. crude and distillate inventories rose unexpectedly and fuel demand slipped in the most recent week, the Energy Information Administration said on Wednesday as a sharp rise in coronavirus cases has started to hit U.S. consumption.

Oil prices steady following news of COVID-19 vaccine Oil prices fall as COVID-19 infections rise Brent crude added two cents, or 0.1 per cent to $44.31 a barrel by 0207 GMT while U.S. West Texas Intermediate (WTI) crude gained six cents or 0.1 per cent to $41.96 a barrel.

Prices have been marking time since hitting a four-month high earlier in the week on hopeful news about a coronavirus vaccine. “Normally, inventories of fuel would be heavily drawn upon, but the surge in numbers of COVID-19 case has stymied the recovery,’’ ANZ said, referring to usual demand during the peak U.S. summer driving season. Crude inventories (USOILC=ECI) rose by 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with expectations in a Reuters poll for a 2.1 million-barrel drop. Production rose to 11.1 million barrels per day, up by 100,000 barrels per day.

A fresh dispute between Washington and Beijing put further pressure on prices. The U.S. gave China 72 hours to close its consulate in Houston amid accusations of spying, marking a dramatic deterioration in relations between the world’s two biggest economies. Economic data from Japan, the world’s fourth-largest oil consumer, also weighed on prices. Factory activity contracted for a 15th straight month in July, indicating that lower economic activity due to the pandemic is extending into the third quarter. The oil market is likely to take direction from consumer confidence data expected from Europe later in the day. (Reuters/NAN)

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