Oil prices erased early gains after Brent hit a new 13-month high above $65 a barrel on Thursday, as concerns that a rare cold snap in Texas could disrupt U.S. crude output for days or even weeks prompted fresh buying.
Brent crude was down 3 cents at $64.31 a barrel at 1046 GMT, after rising to $65.52 earlier in the session, its highest since Jan. 20, 2020.
U.S. West Texas Intermediate (WTI) crude futures eased 4 cents to $61.10 a barrel, after earlier rising to $62.26, the highest since Jan. 8, 2020.
Texas’ freeze entered a sixth day on Thursday, as the largest energy-producing state in the United States grappled with massive refining outages and oil and gas shut-ins that rippled beyond its borders into neighbouring Mexico.
About 4 million barrels of daily refining capacity has been shuttered and at least 1 million barrels per day of oil production is also out.
“The temporary outage will help to accelerate U.S. oil inventories down towards the five-year average quicker than expected,” SEB chief commodities analyst Bjarne Schieldrop said.
Prices also gained support from a larger-than-anticipated draw in the U.S. crude oil inventories.
U.S. crude oil stocks fell by 5.8 million barrels in the week to Feb. 12 to about 468 million barrels, compared with analysts’ expectations for a draw of 2.4 million barrels, American Petroleum Institute data showed.
U.S. Energy Information Administration (EIA) oil inventory data will be released later on Thursday, delayed by a day after a holiday on Monday.
Oil’s 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.
OPEC+ sources told Reuters the group’s producers are likely to ease curbs on supply after April given the recovery in prices.