By Adedapo Adesanya
Oil eased off recent gains despite a draw in crude inventories in the United States amid fears that new coronavirus outbreaks will weaken a global recovery in fuel demand.
At the market on Wednesday, the price of the Brent crude depreciated by 38 cents or 0.59 per cent to sell at $62.78 per barrel, while the West Texas Intermediate (WTI) crude declined by 41 cents or 0.65 per cent to trade at $59.38 per barrel.
Data released by the Energy Information Administration (EIA) showed that the US oil inventories shrunk for a second consecutive week despite a demand drop amid a gradual recovery in economic activity and mixed coronavirus vaccine rollouts.
EIA said inventories for the week ended April 2, excluding those in the country’s Strategic Petroleum Reserve — decreased by 3.5 million barrels from the previous week to stand at 498.3 million barrels.
The market was also depressed over the possibility of a supply increase as Iran and major world powers took steps toward reviving an agreement that froze the country’s nuclear weapons development.
Iran and world powers agreed to form working groups to discuss the possibility of reviving the 2015 deal that could lead to Washington lifting sanctions on its energy sector and increasing oil supply.
This is coinciding with a time when the Organisation of the Petroleum Exporting Countries (OPEC) and allies, a group known as OPEC+, agreed to gradually ease oil output cuts from May.
However, the market can hold on to some semblance of good news as the International Monetary Fund (IMF) said unprecedented public spending to fight COVID-19 could push global growth to 6 per cent this year, a rate not achieved since the 1970s, which also helped the fuel demand outlook, which also helped prices.
While vaccination programmes are increasingly prevalent across the world, countries are still far from herd immunity. In the meantime, virus outbreaks continue to disrupt activities.
COVID-19 cases in the Americas, which accounted for more than half of all coronavirus-related deaths last week, kept prices from moving higher.
India also reported another record daily surge in new coronavirus cases for the second time in four days on Wednesday, while New Delhi, Mumbai and dozens of other cities announced they are imposing curfews to try to slow the soaring infections.
Due to a surge in infections, India has now delayed exports of large quantities of vaccines.