Oil prices extended gains for a fourth session on Thursday to reach the highest levels in more than 13 months, underpinned by an assurance that U.S. interest rates will stay low and a sharp drop in U.S. crude output last week due to the storm in Texas.
Brent crude futures for April gained 17 cents, 0.25%, to $67.21 a barrel by 1306 GMT, while U.S. West Texas Intermediate crude for April was at $63.42 a barrel, up 20 cents, 0.32%.
Both contracts hit their highest since Jan. 8, 2020, earlier in the session with Brent at $67.70 and WTI at $63.79. The April Brent contract expires on Friday.
An assurance from the U.S. Federal Reserve that interest rates would stay low for a while weakened the U.S. dollar, while boosting investors’ risk appetite and global equity markets.
The severe winter storm in Texas caused U.S. crude production to drop by more than 10%, or 1 million barrels per day (bpd), last week, the Energy Information Administration said on Wednesday. [EIA/S]
“Oil prices are holding up, benefiting from a weaker U.S. dollar. I see two factors capping the upside today: Returning crude production in Texas post-storm and market participants awaiting for more clarity from OPEC+ next moves,” Giovanni Staunovo, commodity analyst at UBS, said.
Fuel supplies in the world’s largest oil consumer could also tightened as its refinery crude inputs had dropped to the lowest since September 2008, EIA’s data showed.
ING analysts said U.S. crude stocks could rise in weeks ahead as production has recovered fairly quickly while refinery capacity is expected to take longer to return to normal.
Barclays, which raised its oil price forecasts on Thursday, said it is seeing staying power in the recent oil price rally on a weaker-than-expected supply response by U.S. oil operators to higher prices.
“However, we remain cautious over the near term on easing OPEC+ support, risks from more transmissible COVID-19 variants and elevated positioning,” Barclays said.
The Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, are due to meet on March 4.
The group will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.
Extra voluntary cuts by Saudi Arabia in February and March have tightened global supplies and supported prices.