By Adedapo Adesanya
Oil prices broadened on Thursday as cold weather swept across some parts of the United States and threatened to further disrupt oil supplies.
This helped the Brent crude price to move higher by 46 cents or 0.5 per cent to $91.57 a barrel while the United States West Texas Intermediate (WTI) crude settled higher at $90.90 per barrel for the first time since 2014 following a 63 cents or 0.7 per cent gain.
A massive winter storm swept across the Central and Northeast United States on Thursday where it was delivering heavy snow and ice, making travel treacherous if not impossible, knocking out power to thousands and closing schools in several states.
Also, this led to the cancellation of thousands of flights but the market was not swayed as it worried about production and not short term shocks.
This is adding to the bullishness as geopolitical tensions in Eastern Europe and the Middle East have also fuelled oil’s sharp gains.
The United States warned that Russia was planning to use a staged attack as justification for invading Ukraine.
Russia’s President Vladimir Putin has blamed the North Atlantic Treaty Organisation (NATO) and the West for increased tensions, even as he has moved thousands of troops near to Ukraine’s border.
These developments have pushed Brent futures up by 17 per cent and WTI by 20 per cent so far this year.
On Wednesday, the Organisation of the Petroleum Exporting Countries and its oil-producing allies (OPEC+) decided to stick to a previously announced schedule and increase March production by 400,000 barrels per day.
The move comes as the group has faced pressure, including from the US to boost output in an effort to alleviate the rapid appreciation in oil prices.
Market analysts note that with geopolitical risk in Ukraine and only a gradual increase of production by OPEC+, prices should head towards $100 a barrel.
However, others warn that a rise in inventories could occur in the second quarter and could flip the market into surplus as soon as next quarter, helping put the brakes on the recent surge in prices.
The weakening of the US Dollar also weighed on crude oil as it means an increase in foreign demand for the dollar-denominated commodity.
