Oil Prices Decline With Falling Demand

Oil prices declined on Thursday after the US Energy Information Administration said oil inventories rose than expected in the week ended July 17, 2020.

According to the EIA report released on Wednesday, US crude inventories rose by 4.9 million barrels to 536.6 million barrels, more than twice the 2.1 million barrels decline predicted by Reuters experts.

Crude oil production rose by 100,000 barrels per day to 11.1 million barrels per day during the week despite the reopening of the world’s largest economy. This means demand continues to drop with rising cases of COVID-19 in the US.

“Normally inventories of fuel would be heavily drawn upon, but the surge in Covid-19 case numbers has stymied the recovery,” ANZ said.

The Brent Crude oil, against which Nigerian oil is priced, declined from $44.38 per barrel it traded on Wednesday to $43.86 per barrel as at 3:48 pm Nigerian time.

Similarly, the US West Texas Intermediate moderated slightly from $41.99 per barrel it traded on Tuesday to $41.68 on Thursday.

The decline in oil prices may also be a result of the uncertainty surrounding the US-China relation following the latest decision of the United State government to shut down the Chinese embassy in Houston. A move the Chinese government has sworn to retaliate.

China is the world’s largest importer of crude oil, hence, any economic limitation or uncertainty in China usually impacts the entire crude oil market.