Oil erases gains as US output is frozen by icy weather
Brent crude was down 3c and WTCI 4c after both rose earlier to 13-month highs
London — Oil prices erased early gains after Brent hit a new 13-month high above $65 a barrel on Thursday, as concerns that a rare cold snap in Texas could disrupt US crude output for days or even weeks prompted fresh buying.
Brent crude was down 3c at $64.31 a barrel at 10.46am GMT, after rising to $65.52 earlier in the session, its highest since January 20 2020.
US West Texas Intermediate (WTI) crude futures eased 4c to $61.10 a barrel, after earlier rising to $62.26, the highest since January 8 2020.
Texas’s freeze entered a sixth day on Thursday, as the largest energy-producing state in the US grappled with huge refining outages and oil and gas shut-ins that rippled beyond its borders into neighbouring Mexico.
About 4-million barrels of daily refining capacity has been shuttered and at least 1-million barrels per day of oil production is also out.
“The temporary outage will help o accelerate US oil inventories down towards the five-year average quicker than expected,” SEB chief commodities analyst Bjarne Schieldrop said.
Prices also gained support from a larger-than-anticipated draw in the US crude oil inventories.
US crude oil stocks fell by 5.8-million barrels in the week to February 12 to about 468-million barrels, compared with analysts’ expectations for a draw of 2.4-million barrels, American Petroleum Institute (API) data showed.
US Energy Information Administration (EIA) oil inventory data will be released later on Thursday, delayed by a day after a holiday on Monday.
Oil’s rally in recent months has also been supported by a tightening of global supplies, due largely to production cuts from oil cartel Opec and its and allied producers, including Russia (Opec+).
Opec+ sources said the group’s producers are likely to ease curbs on supply after April given the recovery in prices.
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