By Stephanie Kelly
NEW YORK (Reuters) – Oil prices climbed on Wednesday to fresh 13-month highs after U.S. government data showed a drop in crude output after a deep freeze disrupted production last week.
U.S. crude oil production dropped by more than 1 million barrels per day last week during the rare winter storm in Texas, equaling the largest weekly fall ever, the Energy Information Administration said. Refinery crude inputs dropped to the lowest since September 2008 as the freeze knocked out power to millions. [EIA/S]
“If you’re getting that kind of drop in one week of EIA production, you’re likely to get more after that,” said Phil Flynn, senior analyst at Price Futures in Chicago.
“There is some concern that this will be a long-term permanent production drop.”
Traffic at the Houston ship channel was slowly coming back to normal but terminals were still facing several issues. After nearly a quarter of national refining capacity was idled by the freeze, refineries have also started to come back online this week.
Brent crude futures gained $1.59 or 2.4%, to $66.96 a barrel by 11:27 a.m. EST (1627 GMT). Brent hit $67.20 a barrel, its highest since Jan. 8, 2020.
U.S. West Texas Intermediate (WTI) crude futures rose $1.34, or 2.2%, to $63.01 a barrel. WTI reached $63.32, its highest since Jan. 8, 2020.
The rally continued oil’s steady march to levels not seen since prior to the coronavirus pandemic as vaccine distribution increases and on forecasts for renewed demand.
Oil prices have rallied about 30% since the start of the year, boosted as well by ongoing supply cuts by the Organization of the Petroleum Exporting Countries and its allies.
Brent may trade in a range of $66.45-$66.97 per barrel again, as suggested by its wave pattern and a projection analysis, said Reuters technical analyst Wang Tao.
(Reporting by Stephanie Kelly in New York; additional reporting by Ahmad Ghaddar in London, Roslan Khasawneh and Koustav Samanta in Singapore, and Sonali Paul in Melbourne; Editing by Marguerita Choy and Steve Orlofsky)