Oil prices climb on fears Texas freeze may hamper US crude output

Oil prices climb on fears Texas freeze may hamper US crude output

Oil prices rose as much as a dollar on Thursday, extending this week's gains and hitting 13-month highs, as a cold snap sweeping Texas and surrounding regions shut at least a fifth of U.S. refining output and a million barrels of crude production.

FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County
FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant/File Photo

TOKYO: 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 1.4per cent, to US$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 1.1per cent, to US$61.80 a barrel, registering its highest since Jan. 8, 2020.

Both benchmarks rose about US$1 on Wednesday and have gained more than 6per cent 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 US$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.

U.S. Energy Information Administration (EIA) oil inventory data will be released later on Thursday, delayed by a day after a Monday holiday.

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.

(Reporting by Yuka Obayashi; Editing by Tom Hogue and Richard Pullin)

Source: Reuters

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