By Adedapo Adesanya
Oil prices slipped on Tuesday following a surprise inventory build in the United States after last week’s winter storm affected production.
Brent Crude saw its value chip off 17 cents or 0.26 per cent to trade at $65.07 per barrel, while the United States’ benchmark, West Texas Intermediate (WTI) crude futures, dropped 3 cents or 0.05 per cent to sell at $61.67 per barrel.
The American Petroleum Institute (API) reported on Tuesday a build in crude oil inventories of 1.026 million barrels for the week ending February 19 after analysts had predicted an inventory draw of 5.190 million barrels for the week.
In the previous week, the API reported a draw in oil inventories of 5.8-million barrels after analysts had predicted a draw of 2.429-million barrels.
The market will be waiting for the more trustworthy data from the Energy Information Agency (EIA) which will be released later on Wednesday.
Oil prices recorded a surge on Monday after investment bank, Goldman Sachs, predicted that Brent will reach $70 a barrel in the second quarter and $75 in the following three months, lifting its previous Q2 and Q3 forecasts by $10 per barrel. It expects the lower inventories will lead to an oil price rally sooner and at higher price levels.
Bank of America also said Brent prices could temporarily spike to $70 per barrel in the second quarter.
But the market may be fresh problems as Saudi Arabia and Russia are reportedly once again at odds over oil supply management ahead of another crucial meeting of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) next week.
OPEC’s top producer and de facto leader, Saudi Arabia, would likely prefer the March 3-4 meetings to decide that the OPEC+ coalition holds production flat in April but evidence points to the fact that Russia will likely be pushing for further easing of the production cuts.
Russian Deputy Prime Minister Alexander Novak said earlier this month that the global oil market was balanced and the current price of oil fully reflected this market situation.
The two leaders of the pact are once again going into an OPEC+ meeting with diverging views on how to manage supply to the market. The last time that this happened, oil prices went down to unprecedented levels.