Prices of crude oil rose more than four percent on Wednesday, May 20 after latest data showed that showed another surprise weekly decline in the United States crude inventories.
Brent crude, the international benchmark, went up by 3.64 percent or $1.26 to $35.91 per barrel, while the US West Texas Intermediate (WTI) rose by 5.29 percent or $1.66 to $33.65 per barrel.
As countries continue to lift restrictions, data from the Energy Information Administration (EIA) indicated that crude inventories dropped by 5 million barrels last week.
Last week, EIA reported a surprise drop in US crude inventories, the first since January 2020.
US crude production fell to 11.5 million barrels per day from 11.6 million barrels per day in the prior week, EIA said Wednesday. That’s down from a high of 13.1 million in March and the marked the seventh consecutive decrease.
The American Petroleum Institute (API) on Tuesday reported a decline of 4.8 million barrels.
The EIA data showed crude stocks at the Cushing storage hub fell by about 5.5 million barrels for the week, easing concerns over tightening storage space.
Easing of lockdown restrictions worldwide are boosting demand for fuel, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and its allies known as OPEC+ has been strong so far.
Speaking on this, Mr Mohammad Barkindo, OPEC’s Secretary General, said the cartel was encouraged by the rally in oil prices and strong adherence to its latest output cut.
“The oil markets have responded positively to the historic agreement, as well as its robust implementation by participating countries.
“All in all there is a gradual but steady convergence of the fundamentals of supply and demand,” Mr Barkindo said.
OPEC+ will meet virtually on June 10, when it will have a full month’s data on compliance, to review the agreement.
Analysts have said OPEC+ may keep the current level of supply reduction after June, rather than scaling it back from July as currently agreed.
