Oil jumps to $46 on U.S. stock drop, hope of economic recovery; Bonny Light gains

Oil climbed to $46 per barrel on Wednesday, advancing for a third day, backed by a report that U.S. crude stockpiles fell and as surveys reflecting stronger manufacturing lifted optimism of a recovery from the COVID-19 pandemic.

United States oil inventories dropped by 6.4 million barrels, the American Petroleum Institute (API) said, more than projected.

Globally, manufacturing surveys indicated expanding activity in August. However, outlook remains uncertain.

Brent crude futures, the global benchmark, gained 37 cents or 0.8% at $45.95 a barrel as of 10:11 West Africa Time (WAT), rising for the third straight day. U.S. West Texas Intermediate futures rose 34 cents or 0.8%, to $43.10.

Bonny Light, Nigeria’s banner oil grade, gained 12 cents or 0.26% on Tuesday to close at $44.41 per barrel. Qua Iboe, another major national grade, also appreciated by 26 cents or 0.57 to $46.06.

“Market players are currently riding a wave of optimism, though it could come crashing down at any moment,” said Stephen Brennock of oil broker PVM.

Read also: Oil prices rise on falling U.S. dollar

U.S. crude stockpiles were projected to fall by 1.9 million barrels.

The U.S. government’s Energy Information Administration (EIA) will issue its official data at 3:30 WAT, which will be examined to see if they confirm the API’s figures.

According to Jeffrey Halley, analyst at broker OANDA, the EIA figures “may provide some short-term volatility but are unlikely to provide enough impetus to break oil out of its recent trading ranges.”

Oil has recovered from unprecedented lows hit in April, when Brent fell to a 21-year low below $16 and US crude went negative.

A historic output cut by the Organisation of the Petroleum Exporting Countries (OPEC) and allies, a grouping know as OPEC+, has helped bolster prices.

Producers have started returning some crude to the market as demand partly recovers and OPEC in August expanded output by nearly 1 million barrels per day (bpd), a Reuters survey discovered on Tuesday.

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