Brent hits $64 on oil supply curtailment
Brent oil price jumped further yesterday, spurred by curtailed supplies in the southern United States (U.S.) state of Texas caused by extremely cold weather conditions.
International benchmark Brent crude traded at $64.38 per barrel after closing Wednesday at $63.35 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $60.88 per barrel at the same time for a 1.38per cent increase after it ended the previous session at $60.05 a barrel.
Breaking another psychological barrier, the price of Brent surpassed $64 a barrel for the first time since January 22 when it traded at $64.58.
Bitter cold weather across the US, the world’s largest energy-consuming country, has caused an energy crisis unlike anything seen in years.
Cold weather from the Arctic to the US Midwest brought overall temperatures to their lowest levels since 2011. This resulted in the freezing of natural gas pipelines, wind turbines and the closure of oil wells, triggering electricity distribution problems and massive blackouts in some states.
At least 15 people have lost their lives since last week due to weather-related incidents, including traffic accidents.
Unprepared for the plunging temperatures brought by the winter storm, most of the oil companies halted their operations.
Occidental Petroleum Corp., the second-largest oil producer in the Permian Basin of West Texas and New Mexico, said it would reduce deliveries due to complications from the historic freeze in the region.
Prices of Brent and WTI have been restrained by the massive production cut decision of OPEC+ led by Saudi Arabia in February and March. On the back of the group’s production cuts, Saudi Arabia pledged to further cut 1 million barrels of production, which was exactly what the markets needed amid the pandemic-driven supply glut and low demand.
With Saudi Arabia’s voluntary reduction, the production cut of OPEC+ will reach 8.125 million barrels per day (bpd) for February and 8.05 million bpd in March, thus reducing output in February by 925,000 bpd and 850,000 bpd in March relative to output rates in January.
Investors are now expecting the announcement of US crude oil inventory data by the American Petroleum Institute and the US Energy Information Administration (EIA) on Wednesday and Thursday respectively.
SOURCE: THE NATION