Oil prices rise as US inventory drops, Bonny Light gains $0.74

Oil prices gained further on Thursday as a fall in the United States crude stockpiles boosted demand hopes, while signs of an imminent Brexit deal buoyed investors’ risk appetite.

Brent crude futures climbed by 17 cents or 0.3% to $51.37 per barrel by 08:45 West Africa Time, while U.S. West Texas Intermediate (WTI) crude rose by 10 cents or 0.2% to $48.22.

Both benchmarks added over 2% on Wednesday.

Bonny Light, Nigeria’s flagship crude oil grade, appreciated by 74 cents or 1.48% to $50.80. But Qua Iboe, another key national oil grade, declined by 40 cents or 0.80% to $49.40.

“Lower U.S. inventories of crude and fuels as well as signs of a potential Brexit deal which led to weaker U.S. dollar were good news,” Hiroyuki Kikukawa, general manager of research at Nissan Securities said.

“But lingering worries over a new variant of the novel coronavirus capped (oil prices) gains,” he added.

Read also: Oil prices drop amid rise in U.S. crude inventories, Bonny Light adds $0.46

U.S. crude stocks dropped by 562,000 barrels in the week to 18^th December to 499.5 million barrels, the Energy Information Administration (EIA) disclosed on Wednesday, boosting oil prices.

Gasoline inventories eased by an unexpected 1.1 million barrels to 237.8 million barrels, according to the EIA, while distillate stocks crashed by a bigger-than-anticipated 2.3 million barrels.

Oil prices gained strength from reports that the United Kingdom and the European Union were on the brink of reaching a narrow trade deal on Thursday, swerving from a chaotic finale to the Brexit split.

The potential deal strengthened sterling, which gained 0.2% against the dollar after closing up 0.9%. A softer dollar makes commodities denominated in dollar more affordable for holders of other currencies.

“Risk appetite among investors improved also because of a rebound in global equities, which underlined that fears over a new variant of the coronavirus have receded a little,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Some investors remain in panic about the rebound of oil demand as Americans were warned again not to travel for Christmas as the latest surge in cases overwhelmed hospitals.

This week, U.S. oil and gas companies added oil and natural gas rigs for a fifth consecutive week, boosting oil prices.

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