Oil prices climb on fears Texas freeze may hamper U.S. crude output
Oil prices rallied again on Thursday to hit 13-month highs as concerns that a rare cold snap in Texas could disrupt U.S. crude output for days or even weeks prompted fresh buying.
Brent crude climbed 89 cents, or 1.4%, to $65.23 a barrel by 0524 GMT, touching its highest since Jan. 20, 2020. U.S. West Texas Intermediate (WTI) crude futures gained 66 cents, or 1.1%, to $61.80 a barrel, registering its highest since Jan. 8, 2020.
Both benchmarks rose about $1 on Wednesday and have gained more than 6% since their close last Thursday.
Texas oil producers and refiners remained shut for a fifth day on Wednesday after several days of blistering cold, and the governor ordered a ban on natural gas exports from the state to try to speed the restoration of power.
Roughly 1 million barrels per day (bpd) of crude production has been shut, according to Wood Mackenzie analysts, and it could be weeks before it is fully restored.
“Oil prices got a boost again from expectations that the disruptions of Texas oil producers and refiners due to the cold storm could last for a while,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
“With hopes of fresh U.S. economic stimulus and wider rollouts of the COVID-19 vaccine, oil prices are expected to stay on the bullish trend,” he said, predicting that WTI could test a key $65 level.
In addition, a larger-than-anticipated draw in the U.S. crude oil inventories added to supply concerns, said Chiyoki Chen, chief analyst at Sunward Trading.
U.S. crude oil stocks fell by 5.8 million barrels in the week to Feb. 12 to about 468 million barrels, compared with analysts’ expectations for a draw of 2.4 million barrels, American Petroleum Institute data showed. [API/S]
U.S. Energy Information Administration (EIA) oil inventory data will be released later on Thursday, delayed by a day after a Monday holiday. [EIA/S]
Oil’s price rally in recent months has also been supported by a tightening of global supplies, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the OPEC+ grouping that includes Russia.
OPEC+ sources told Reuters the group’s producers are likely to ease curbs on supply after April given the recovery in prices.