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Oil soars to $65 on huge inventory draw


A day after another bullish oil inventory estimate from the American Petroleum Institute (API), the Energy Information Administration (EIA) reported another solid decline in inventories, which added fuel to  price rally yesterday.

Brent crude traded at $65.09 a barrel, while West Texas Intermediate (WTI) tarded at $58.39 a barrel, both up from previuos day’s close.

Nigeria’s N8.91 trillion Appropriation Act 2019 was hinged on an estimated oil daily production of 2.3 million barrels; oil price benchmark of $60 per barrel and an exchange rate of N305 to the dollar.

The Senate had jerked up the budget by N80 billion, up from the N8.83 trillion presented by President Muhammadu Buhari to lawmakers last year.

The EIA said crude oil inventories had shed 8.5 million barrels in the week to July 26, to a total 436.5 million barrels, which was at the five-year average for this time of the year.

This compares with a 10.8-million-barrel inventory draw a week previously that helped WTI move a lot closer to the $60 mark in combination with other factors, chief among them geopolitical concerns focused on the Middle East.

Analysts had expected the EIA to report an inventory decline of 1.82 million barrels for the week to July 26.

The EIA went on to report a 1.8-million-barrel decline in gasoline inventories for last week. This compares with a 200,000-barrel decline in inventories a week earlier.

In distillate fuels, the authority reported a 900,000-barrel fall, which compared with an increase of 600,000 bpd a week earlier.

In production, the EIA reported an average gasoline production rate of 10.4 million bpd for last week, up from 10.1 million bpd a week before that. Distillate fuel production averaged 5.2 million bpd, slightly down on a week earlier.

Refineries processed a total of 17 million barrels daily last week, unchanged on a week earlier.

Oil prices have been trending higher over the past week or so mainly on the back of updates from the Middle East that suggest tensions between the West and Iran are not going away anytime soon. The latest, out yesterday, was a statement by the commander of Iran’s Navy that it will hold joint military drills with the Russian Navy in the Persian Gulf.

The announcement comes as the United Kingdom (UK) seeks to create a united European fleet to send to the Gulf to guard vessels from the Iranian Islamic Revolutionary Guard Corps after the latter seized British-flagged Stena Impero earlier this month.

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