Oil prices were volatile on Thursday, however keen to return to their upward path despite an unexpected build in US crude oil inventories as the world countries are bracing a post-COVID energy crises.
International benchmark Brent crude was trading at $77.92 per barrel at 0701 GMT for a 0.21% decrease after closing Wednesday at $78.09 a barrel.
American benchmark West Texas Intermediate (WTI) was at $74.72 per barrel at the same time for a 0.14% drop after it ended the previous session at $74.83 a barrel.
Both benchmarks have been recording downward movements for the last three days after a surge for five weeks due to supply disruptions in oil producing countries.
A surprise increase in commercial crude oil stocks in the US, the world's largest oil consumer, exerted downward pressure on already falling oil prices, signaling a slow-down in oil demand.
US commercial crude oil inventories increased by 1.1% for the week ending Sept. 24, according to the latest data released by the Energy Information Administration (EIA).
Inventories increased by 4.6 million barrels, contrary to the market expectation of a fall of 2.3 million barrels.
Gasoline inventories also increased by 200,000 barrels to 221.8 million barrels over the same period.
Although no surprise policy change is not expected, investors are now keeping tabs on the upcoming OPEC+ meeting to be held on Oct. 4 when producers will review their output policy after sticking with supply increases of 400,000 barrels per day in recent months.
Despite current fluctuations, experts signal to the positive sentiment on the market after some market influencers announced their higher level of oil price predictions for 2021.
One of the most influential banks in the commodity markets, Goldman Sachs, on Monday increased its oil price forecast for this year by $10 per barrel to $90.
Goldman Sachs attributed its price revision to the faster-than-expected recovery in fuel demand after the impacts from the Delta variant of COVID-19 and to the contraction in global supply with the decline in US crude oil stocks.
Also, the Wall Street bank revised up its oil price estimate, lifting its previous US crude oil price of $77 a barrel to $87 per barrel.
The record high prices of natural gas prices continue to support upward movements of oil prices, too. Experts believe that the gas price problem would raise demand for alternative fuels, forcing electricity companies to switch to use oil instead of gas in production.
OPEC Secretary-General Mohammad Barkindo pointed during the 55th Joint Technical Committee (JTC) meeting to “the economic recovery and solid fundamentals” which are supporting the oil market, attributing it to OPEC’s expectations of rising oil demand.
“From where we stand today, the OPEC non-OPEC Ministerial decisions to begin returning 400,000 b/d to the market each month continue to help balance the need for incremental increases to address demand, while guarding against the potential for supply overhangs,” Barkindo noted.
By Sibel Morrow