By Justice Derefaka (Technical Adviser on Gas to the Honorable Minister of State for Petroleum Resources)
Oil prices hit five-month highs.
The two benchmark contracts rose more than 1% on Wednesday to their highest since March 6, completing a four-day rally, after the Energy Information Administration reported a much bigger than expected drop in U.S. crude stockpiles. EIA/S
However, investors remained wary of rising U.S. refined product inventories at a time when U.S. central bankers said the resurgence in cases was slowing the economic recovery in the world’s biggest oil consumer.
EIA data showed distillate stockpiles, which include diesel and heating oil, climbed to a 38-year-high, and gasoline inventories unexpectedly rose for a second week in a row.
The U.S. EIA calculated gasoline demand remains around 8.6 million barrels per day, around 10% lower than a year earlier, just as the U.S. driving season, which ANZ Research called the “world’s biggest seasonal demand period”, was winding down.
Still, recent declines in the U.S. dollar have supported higher oil prices. Since oil futures are priced in dollars, crude prices tend to rise to offset the weaker currency.
“Since oil is priced in dollars, that is good for oil,” AxiCorp market strategist Stephen Innes said in a note.
The dollar logged its biggest monthly percentage fall in a decade against a basket of six currencies .DXY in July and a Reuters poll found analysts expect it to continue falling into next year.
After a flurry of sales at the end of last week and earlier this week, spot activity slowed on Wednesday as traders waited to see how much of the Nigerian overhang two tenders would mop up.
Spot trade for August and September-loading cargoes picked- up, with trades being sealed at lower values.
Several August parcels of Nigerian grades were still on offer, according to traders. ExxonMobil sold its 30-31 August Qua Iboe cargo to an unspecified buyer, market participants said.
Prices are as follows:
(1)Dated Brent =$45.920 / bbl (1.75)
(2)Bonny Light =$45.485/bbl (1.73)
(3)QuaIboe =$45.285 /bbl (1.73)
(4)Forcados =$45.635 /bbl (0.14)
Premium unleaded pms= $393.25/mt (16.75)
0.1% Gasoil= $386.75/mt (13.5)
Clean Tanker freight UKC-WAF= 18.35/mt (-0.83)
Top of the day to you.