By Adedapo Adesanya
Crude oil fell slightly on Thursday as investors took profits after two days of gains boosted by tighter supply amid an expected recovery in demand.
The data showed Brent crude lost 96 cents or 0.81% to trade at $83.86 a barrel, while US West Texas Intermediate (WTI) crude fell $1.40 or 1.16 % to sell at $81.48 a barrel.
Prices have soared more than 50% in 2021 and some analysts expect the recovery to continue, predicting that low production capacity and limited investment could push crude up to $100 a barrel.
But before that, traders saw a way to quickly withdraw their profits in Thursday’s session.
Fears of aggressive interest rate hikes by the US Federal Reserve also put pressure on the market.
With inflation in the world’s strongest economy at its highest level in nearly 40 years, the country’s central bank plans to start curbing economic growth as early as March, with further monetary policy tightening. throughout the year.
Last month, policymakers agreed to end their bond purchases by March and signaled they could raise interest rates three times this year.
Analysts noted that the move could potentially affect crude prices as it would strengthen the US dollar, which is priced for the commodity.
Oil prices generally move inversely to the greenback, with a stronger greenback making commodities more expensive for those holding other currencies.
Investors were taking a closer look at data from the U.S. Energy Information Administration (EIA) on Wednesday, although crude oil inventories fell more than expected, the report also showed fuel demand was hit. by Omicron in the country, which is the largest in the world. oil consumer.
However, the losses were limited by speculation that Omicron was not severe enough to derail a recovery in global demand and cold weather in North America.
Global oil demand has proven more resilient to the effects of the spread of the Omicron variant than the International Energy Agency predicted, according to its chief, Mr. Fatih Birol.
The IEA chief also noted that supply disruptions in Libya and Kazakhstan also contributed to the imbalance with demand.
“We are seeing some of the major producers, including Nigeria, Libya and also Ecuador, experiencing severe supply disruptions,” Birol said.
In Nigeria, production continues to be affected by technical and operational issues while most other OPEC members and Russia have also struggled to increase production in line with quotas.
Freezing winter temperatures disrupted crude flows in parts of the United States, but pipelines that shut down have since resumed.