Crude Oil Jumps 3% as US Winter Storm Affects Output

By Adedapo Adesanya

Crude oil appreciated by 3 per cent on Tuesday as a winter storm in the United States affected crude production and drove US Gulf Coast crude exports to zero over the weekend.

During the session, Brent crude futures went up by $1.98 or 3.02 per cent to $67.57 a barrel and the US West Texas Intermediate (WTI) crude futures grew by $1.76 or 2.9 per cent to trade at $62.39 a barrel.

US oil producers lost up to 2 million barrels per day or roughly 15 per cent of national production over the weekend as a severe winter storm swept across the country, straining energy infrastructure and power grids.

The severe weather has boosted crude futures, with short-term risks rising on fears of supply disruptions.

According to Reuters, the Permian Basin experienced the largest share of that decline at around 1.5 million barrels per day. Production losses eased on Monday, with Permian shut-ins estimated at about 700,000 barrels per day and production set to be fully restored by January 30.

The exports of crude oil and liquefied natural gas from US Gulf Coast ports tumbled to zero on Sunday amid frigid weather. However, this has rebounded in the last days.

Also boosting prices,  Kazakhstan’s biggest oilfield, Tengiz, is likely to restore less than half of its normal production by February 7 as it slowly recovers from a fire and power outage.

The slow pace of recovery of Tengiz’s production is keeping the oil market tighter while a weaker US Dollar also lended some support.

However, the CPC, which operates Kazakhstan’s main exporting pipeline, said it returned to full loading capacity at its terminal on the Russian Black Sea coast after maintenance was completed at one of its three mooring points.

On the geopolitical front, the US landed an aircraft carrier and supporting warships in the Middle East, adding to the slim chance of a military action against Iran.

President Donald Trump Trump had repeatedly threatened to intervene if Iran continued to kill protesters, but the countrywide demonstrations have since abated. The US president said he had been told that killings were subsiding and that he believes there is currently no plan for the executions of prisoners.

Meanwhile, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) is set to keep its pause on oil output increases for March at a meeting on February 1.