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The US crude oil inventories dropped during the last
week, having been on the rise for six successive weeks, while defying the logic
of analysts.
The API, American Petroleum Institute, reported on
Tuesday that the US crude inventories fell by 4.585 million barrels, exceeding
the expectations; the forecast was a build of 1.9 million barrels.
In response to the surprising news, the price of
crude oil went up on Tuesday, only to fall slightly as the day wore on.
Crude oil markets are still edgy as the response of
the Biden administration to the rising oil prices is anybody’s guess at the
moment.
When the OPEC+ refused to toe the line of the major
consumers, President Biden vowed to resort to ‘other measures’, without
specifying what they could be.
As the COP26 conference is coming to a close, the
Western leaders finally will be able to react to what is happening on the ground
due to fossil fuels shortages, with the luxury of being free from the shackles
of various pressure groups.
The rising energy costs have already taken its toll
on major Asian economies such as Japan and China; the inflation is on the rise
and in proportion to that economists fear that the spending power of the
consumers in the region will go down.
The global supply chain issues, meanwhile, are adding
an extra burden on policy makers; it has led to sharp increase in raw materials
too.
The global shortage of computer chips is also of
great concern at present: the production of vehicles, both in China and Japan,
is down significantly and cooling auto markets will not be able to increase the
demand for crude oil in two major markets in the world.
In China, meanwhile, the authorities are taking
sweeping measures to cut down on carbon emissions: although coal power plants
are still used for generating power, there are policy move in place to reduce
the reliance on them gradually.
The EIA, US Energy Information Administration, will
release its own data, highlighting the state of US crude oil inventories on
Wednesday. If it also says that the inventories are down, analysts will be
confident that the demand has finally picked up.
