The international oil benchmark, Brent crude, rose on Wednesday to its highest since early March after a large decline in the United States’ crude inventories and supported by a weak dollar.
Brent, which plunged to as low as $15.98 per barrel in April, its lowest since June 1999, has continued to rise in recent months on the back of the production cuts by the Organisation of Petroleum Exporting Countries and the gradual easing of lockdowns by many countries.
But mounting coronavirus infections had investors worried about the demand outlook, according to Reuters.
Brent, against which Nigeria’s crude is priced, was up $1.51, or 3.4 per cent, at $45.94 a barrel by 11:13 a.m. ET. US West Texas Intermediate rose by $1.52, or 3.7 per cent, to $43.22 a barrel.
US crude inventories fell by 7.4 million barrels in the week to July 31 to 518.6 million barrels, the Energy Information Administration said. That exceeded the draw of three million barrels analysts predicted in a Reuters poll.
A weaker dollar, which makes oil cheaper for holders of foreign currencies, also supported prices.
“There’s no escaping the benefits of a weaker dollar in the commodity space and oil is certainly basking in its decline,” senior OANDA analyst, Craig Erlam, said.
Oil also drew support from signs that talks between Democrats in Congress and the White House on a new coronavirus relief package are making progress, although the sides remain far apart.
US factory data this week also showed an improvement in orders, which some analysts took as a hint of economic recovery.