Oil Price Rise to $45 Per Barrel on Lower US Oil Inventories

Oil price expanded on Wednesday following a better than expected lower crude oil output from producers in the United States.

The data released by the Energy Information Administration showed that crude oil output from the world’s largest economy declined from 11 million barrels per day to 10.7 million barrels per day last week.

While U.S. fuel demand rose to the highest since March. The demand hits 19.37 million barrels per day in the week, highlighting a gradual increase in demand with the opening of the economy.

Also, crude oil inventories declined by 4.5 million barrels, better than the 2.9 million decline predicted by Reuters’ expertise.

The low oil inventories bolstered the price of Brent crude oil, Nigerian type of oil, by 2 percent to $45.35 per barrel as at 11:30 am Nigerian time.

However, OPEC newly released projection revealed that crude oil demand will drop than initially projected in 2020. This, coupled with the International Energy Agency revised projection that oil demand will now be 91.1 million barrels per day in 2020, around 8.1 million bpd year-on-year decline, stalled crude oil price movement on Thursday as investors and traders now doubt sustainability given the new predictions.

“OPEC released a bearish monthly forecast which indicated that world oil demand will fall more steeply in 2020 than previously forecasted due to the coronavirus and there are doubts about next year’s recovery,” said Avtar Sandu, senior manager commodities at Phillip Futures.