Oil Prices Drop over Mounting Pressure on Demand

Oil Prices Drop over Mounting Pressure on Demand

Oil prices drop on Wednesday over mounting pressures on demand following 65% drop in activities at Texas refineries and large stocks pile record in the United States.

Crude prices sloped downward over estimated increase in US oil inventories.

In the same vein, demand from Texas refineries was curtailed following weather related issue that hit the biggest oil-producing state.

Market data shows international benchmark Brent crude was trading at $64.24 per barrel early today, having dropped 0.37% after closing Tuesday at $64.48 a barrel.

Also, American benchmark West Texas Intermediate (WTI) was at $61.28 per barrel at the same time, plunged 0.63% after it ended the previous session at $61.67 a barrel.

Late Tuesday, the American Petroleum Institute (API) announced its estimate of a rise of over 1.03 million barrels in US crude oil inventories relative to the market expectation of a 5.3 million-barrel fall.

It was noted that crude stocks increase in line with the API’s expectations signals that crude demand is falling in the US, the world’s largest oil consumer.

This specifically affect oil prices negative amidst other issues facing the industry, and by extension, the oil market.

Meanwhile, the estimated rise in oil inventories was mainly caused by a lack of demand from refineries in Texas.

This happened after the US state’s oil production fields were caught unprepared in an unprecedented cold front that lasted almost a week, bringing 65% of production to a halt.

On Tuesday, the US Energy Information Administration (EIA) is expected to release a report on last week’s crude inventories.

Oil and gas analysts believe that negative predictions on a timely economic recovery in the US also weighed on prices.

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US Federal Reserve Chair Jerome Powell said the focus needed to remain on an economic recovery that is “uneven and far from complete,” and which would need the central bank’s help for “some time” to get back to full employment.

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved,” Powell said.

On Tuesday;

Oil prices showed a significant rise on Tuesday over the slow return of production in Texas and on optimism over the vaccine campaigns’ work to eradicate Covid-19.

International benchmark Brent crude was trading at $65.12 per barrel for a 1.18% rise after closing Monday at $64.36 a barrel.

American benchmark West Texas Intermediate (WTI) was at $62.39 per barrel at the same time for a 1.11% increase after ending the previous session at $61.70 a barrel.

Oil prices started the week on a bullish sentiment with the slow pace of normalizing output in Texas after the US state’s oil production fields were caught unprepared in an unprecedented cold front that lasted almost a week, bringing 65% of production to a halt.

Oil Prices Drop over Mounting Pressure on Demand