Oil prices rise after plunge in U.S. crude inventories

Oil prices climbed on Wednesday after statistics indicated a major fall in the United States crude storage.

However, there are growing concerns that increasing rising COVID-19 cases will slow down the limited gains recorded in fuel demand.

Brent crude was up by $1.06 or 2.39 percent at $45.49 per barrel by 11:18 West Africa Time just as U.S. West Texas Intermediate jumped $1.05 or 2.52 percent to $42.75.

Bonny Light, Nigeria’s premium crude grade, depressed by $0.09 or 0.21 percent to $43.79 per barrel on Tuesday.

But another key national grade, Qua Iboe, bucked the general market downtrend that same day, advancing instead by $0.57 or 1.30 percent to $44.45.

Oil stockpiles in the U.S. lowered by 8.6 million barrels to 520 million barrels in the week to August 1 relative to experts’ anticipation of a 3 million barrel fall, according to the American Petroleum Institute. Official data are to be released on Wednesday.

Read also: Oil prices fall as coronavirus cases surge, Bonny Light gains $0.96

The Head of Oil Markets at Rystad Energy, Bjornar Tonhaugen, said: “A bullish sentiment is justified initially today (Wednesday) on the U.S. stocks news. But we believe bulls may need to take shelter back at the ranch in coming days, as COVID-19 takes again the centre stage.”

COVID-19 cases continue to jump. Deaths are more than a thousand a day in the US where many states are compelled to call off or scale back moves to restart their economies.

“We see gasoline demand coming in close to 7 percent year-on-year lower through Q3, with gas oil/diesel registering a decline of some 4 percent, implying a continued slowdown of the recovery, with a global return to 2019 levels this year increasingly in doubt,” JBC Energy said.

It expects jet fuel demand to plummet by half through the third quarter relative to the same time last year.

Sentiment was bolstered by indications that deliberations between Democrats in Congress and the White House over a new COVID-19 relief package are advancing even though sides remain wide apart.

The U.S. factory data this week also reflected an increase in orders, which analysts saw as an omen of economic recovery.

The July IHS Markit services purchasing manager index of Germany advanced to 55.6, the first time it would surpass the 50.0 mark that separates expansion from contraction since lockdown measures were deployed in March.

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