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Brent crude price steadies at $75 as US inventories drop

By Adebowale Akanji 

BRENT crude steadied at $75 a barrel on Thursday as the United States records a big drop in stock amidst expectation of global demand recovery.  The oil market has witnessed a mild shock recently following increased delta variants in Asia, Europe and America.

Meanwhile, data shows that the United States fuel inventories recorded massive decreases amid continued supply disruptions after Hurricane Ida hit the Gulf of Mexico. International benchmark Brent crude was trading at $75.48 per barrel, representing a 0.02% increase after closing Wednesday at $75.46 a barrel.

American benchmark West Texas Intermediate (WTI) was at $72.67 per barrel at the same time for a 0.08% rise after it ended the previous session at $72.61 a barrel.

The increase in crude oil price was partly driven by the more-than-expected drop in US stockpiles pushed prices higher, the world’s largest oil consumer.

According to the latest data released by the Energy Information Administration (EIA) late Wednesday, US commercial crude oil inventories dropped by 6.4 million barrels, or 1.5%, to 417.4 million barrels during the week ending Sept. 10, compared to the market expectation of a 3.9 million-barrel draw.

Brent has rallied 46% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies, and some demand recovery from last year’s pandemic-related collapse.

Adding to the signs of demand recovery, closely watched reports this week said world oil use will rise above 100 million barrels per day, a level last seen in 2019, as soon as next year’s second quarter.

Oil is also finding support from a surge in European power prices, which have sky-rocketed due to a host of factors including low gas inventories and lower-than-normal gas supply from Russia.

Strategic petroleum reserves, which are not included in commercial crude stocks, also decreased to 620.8 million barrels last week, while gasoline inventories fell by 1.9 million barrels to 218.1 million barrels over that period.

Oil traders and investors noted that a significant drop in inventories indicates an increase in crude demand in the US, the world’s largest oil consumer, assuaging market concerns over dwindling demand.

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