By Adedapo Adesanya
Oil prices fell on Wednesday as a result of weaker demand after the Energy Information Administration (EIA) reported an inventory decline of 5.2 million barrels for the week to June 4.
A day earlier, the American Petroleum Institute (API) had reported an inventory draw of over 2.1 million barrels for the period.
Analysts had expected the EIA to report an inventory draw of 3.6 million barrels, after last week the EIA estimated inventories had shrunk by over 5 million barrels for the last full week of May.
However, a weakened demand, caused by poor weather and hoarding during the Colonial Pipeline outage last month, added to the stockpiles climbing.
This plunged the price of the Brent crude futures by 64 cents or 0.89 per cent to trade at $71.55 per barrel, while the United States benchmark, West Texas Intermediate (WTI) crude futures lost 61 cents or 0.87 per cent to sell at $69.35 per barrel.
Oil has been trending higher again this week, with Brent returning to over $72 per barrel at the time of writing and West Texas Intermediate at over $70 per barrel, mostly driven by the rebound in demand for fuels and plans by oil producers to not rush with the easing of its production cap.
The market also let go of the prospect of Iranian supplies returning faded after the United States Secretary of State, Mr Anthony Blinken, said sanctions against Iran were unlikely to be lifted even after a deal is reached.
The market had been jittery over concerns that the sanctions against Iranian exports would be lifted and oil supply would increase this year as talks with western powers progressed.
Analysts still anticipate an uptick in oil demand as the US summer driving season commences. It coincides with a successful vaccination campaign that has allowed the economy to open up.
Price forecasts are becoming increasingly bullish, with some even talking about a return to $100 oil, a price level last seen around 2014.