Oil near 13-month high as storm impact output

LONDON — 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 per cent, to US$67.21 a barrel by early afternoon, while U.S. West Texas Intermediate crude for April was at US$63.42 a barrel, up 20 cents, 0.32 per cent.

Both contracts hit their highest since Jan. 8, 2020, earlier in the session with Brent at US$67.70 and WTI at US$63.79. The April Brent contract expires today.

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 per cent, or one million barrels per day, last week, the Energy Information Administration (EIA) said Wednesday.

“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.