SINGAPORE – Oil prices continued with gains for a fourth session on Thursday to reach the highest levels in more than 13 months, reiterated by the announcement that US interest rates will stay low, and a sharp drop in US crude output last week, due to the storm in Texas.
Brent crude futures for April gained 37 cents, 0.6%, to $67.41 a barrel by 0718 GMT. US West Texas Intermediate crude for April was at $63.54 a barrel, up 32 cents, 0.5%.
Both contracts sealed their highest point since January 8, 2020, earlier in the session with Brent at $67.49 and WTI at $63.67. The April Brent contract will end on Friday.
The Energy Information Administration said on Wednesday that a severe winter storm in Texas has resulted in a drop in US crude production by more than 10%, or 1 million barrels per day (bpd) last week.
“Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher,” Jeffrey Halley, senior market analyst for Asia Pacific at OANDA said.
Fuel supplies in the world’s largest oil consumer could also toughen as its refinery crude inputs had seen a drop to the lowest since September 2008, according to EIA’s data.
ING analysts said US crude stocks could climb in weeks ahead as production has seen a rebound fairly quickly while refinery capacity is estimated to take longer to come back to normality.
Barclays, which upped its oil price forecasts on Thursday, said it sees power staying, with regard to the recent oil price rally over a supply response, weaker than expected, by US tight 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 their allies including Russia, a group known as OPEC+, is likely to meet on March 4.
The group will be talking on a mild easing of oil supply curbs from April aiming for a recovery in prices, said OPEC+ sources. However, there has been some suggestions for keeping it steady for now, with the risk of new setbacks, amid the battle against the pandemic.
Additional voluntary cuts by Saudi Arabia in February and March have led to tighter global supplies and supported prices.