Oil prices rise after steep drop in US inventory

Oil prices rose after crude stockpiles in the United States, the world’s top oil consumer, fell to their lowest since January 2020.

Brent crude oil futures, the global oil benchmark, rose by 0.5% to $74.25 a barrel by 10:09 am on Thursday, while U.S. West Texas Intermediate (WTI) crude oil futures witnessed a corresponding increase of 0.6 % to $72.88 a barrel.

In June, Brent crossed the $75 mark — the highest level since April 2019.

However, it fell amid concerns that the rapid spread of the Delta coronavirus variant will lead to more lockdowns and the frequent postponements on outcome decisions by the Organisation of Petroleum Exporting Countries and its allies known as OPEC+.

On Wednesday, the United States Energy Information Administration (EIA) said that crude inventories fell by 4.1 million barrels for the week ended July 23, helped by lower imports and a decline in weekly production.

Gasoline stocks also dropped, bringing them largely in line with pre-pandemic levels.

The drop in crude supplies was larger than most market expectations.

At the recently concluded 19th OPEC and non-OPEC ministerial meeting, OPEC+ agreed to increase production by 400,000 barrels per day.

In June, Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), had said rising crude oil prices will cause problems for resource-dependent countries such as Nigeria.

He lamented that oil prices had started exiting the comfort zone set by the NNPC, and becoming a burden for the country.