This week’s API Inventory Report showed another round of decline in US crude stockpiles.
For the week ending July 1, inventories declined by 8.0 million barrels. This extends the 8.2 million barrels of fall recorded in the previous week.
Despite the update, the Brent crude chipped off $1.10 from its value, settling at $73.43 per barrel.
Following the downtrend, the West Texas Intermediate fell by 1.6% or $1.17 a barrel. The American benchmark is last seen hovering at $72.20 a barrel.
This extends the negative momentum incurred on Tuesday, where the contract shelved almost 4% off its value.
Analysts noted that the recent fall is mainly due to OPEC’s indecision on the future path of its production curbs.
Earlier, reports pointed out the opposition of the United Arab Emirates on the consensus to hike production capacity.
Insiders noted that member states originally agreed to increase 400,000 to 2 million barrels from August to December period.
On the other hand, some members noted that it is too early to increase production as the Delta variant starts to hold on the market.
For the record, the new Covid variant has now spread its havoc on some important business districts. This, thereby, ignited concerns on the future of oil demand.
This is especially important as currently available inoculations in the market have minimum level efficiency against the new variant.
In an estimate on oil price, EIA noted that the American benchmark might likely settle on the $72.00 per barrel threshold over the remainder of the year.
This projection comes along with its latest update, which shows that US fossil fuel consumption slumped by 9% in 2020.
Organization of the Petroleum Exporting Countries Eyed
Commodity strategists noted that crude would not move into the positive territory until OPEC finally announces its supply decision.
The recent fallout on the Organization of the Petroleum Exporting Countries’ decision is likely to subdue price movement in the short term.
In a brief context, member states’ convention last week instantaneously ignited optimism among investors.
However, the sentiment hit a plateau before the week recessed following the failure to hit consensus.
Experts in the field noted that the recent opposition ignites the risk of further riffraff in the future. It is one of the rarest occurrences that Emiratis failed to chime in on the de facto leader, Saudi Arabia’s decision.
Nevertheless, oil price remains on the bullish path, having been ascended by 50% since the start of the year.