Business

Oil prices rise on fears of Texas freeze affecting output

18 Feb 2021

Picture used for illustrative purpose. File

Gulf Today Report

Oil prices rallied on Thursday due to concerns over the cold situation in Texas affecting US crude output for days or weeks.

Brent crude climbed 89 cents, or 1.4%, to $65.23 a barrel by 05:24 GMT while US West Texas Intermediate (WTI) crude futures gained 66 cents, or 1.1%, to $61.80 a barrel.

Texas oil producers and refiners have been shut for five days due to blistering cold, in addition, the governor has banned the exports of natural gas from the state to speed the restoration of power.

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Hiroyuki Kikukawa, general manager of research at Nissan Securities said, "oil prices got a boost again from expectations that the disruptions of Texas oil producers and refiners due to the cold storm could last for a while."

In addition, a larger-than-anticipated draw in the US crude oil inventories added to supply concerns, said Chiyoki Chen, chief analyst at Sunward Trading.

Oil's price rally in recent months has also been supported by a tightening of global supplies, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the OPEC+ grouping that includes Russia.