Crude oil prices fell 1.1 % to $ 36.40 a barrel Wednesday, after surprise gains Tuesday when the international benchmark Brent crude rose above $37 a barrel, the first significant gain in two months.
The rally halted after the American Petroleum Institute announced late Tuesday that US crude oil stocks grew by 9.9 million barrels last week, higher than the 2.6 million barrel expansion projected by oil watchers. The US crude inventories stood at 507.6 million barrels as at last week.
Tuesday’s rally was fuelled by speculations that a freeze deal was been expected by OPEC to sort out the over-supplied market.
Prices rose back to $30 early February from just above $20 and has gained about 17% since, closing at $37 Tuesday.
Most observers say the price volatility will continue to challenge Nigeria’s government thinking on the 2016 budget funding with the benchmark pegged at $38 per barrel. Analysts don’t expect any positive price gains even if production levels are capped because countries like Russia are still pumping huge numbers. Russia’s January output was a record 10.8 million barrels.
