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.
Brent crude climbed 93 cents, or 1.5%, to $65.27 a barrel by 0219 GMT, touching its highest since Jan. 20, 2020. U.S. West Texas Intermediate (WTI) crude futures gained 76 cents, or 1.2%, to $61.90 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. The unusual freeze hitting much of the United States could hamper crude output for days or even weeks, analysts said.
Oil Sector Texas Cold Shut
The Texas energy sector remained without power for a fifth day on Wednesday, after an arctic blast stretched deep into southern states not typically hit by extreme cold.
Roughly 1 million barrels per day (bpd) of crude production have been shut, according to Wood Mackenzie analysts, and it could be weeks before production is fully restored.
“A flurry of fresh buying in oil futures was triggered as an unexpected impact on oil production and refiners in Texas from a cold storm raised supply fears of crude and fuel,” said Chiyoki Chen, chief analyst at Sunward Trading.
“A larger-than-anticipated draw in the U.S. crude oil inventories also added to supply concerns,” Chen said.
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 prices have rallied over recent weeks on hopes for U.S. stimulus and as global supplies tighten, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+.
But OPEC+ sources told Reuters the group’s producers are likely to ease curbs on supply after April given the recovery in prices.