Oil prices extended gains on Thursday on supply concerns that the rare cold snap in the south of the US may disrupt output for weeks, and over a more-than-expected build in US crude inventories that bolsters hopes of a demand rebound in the world’s largest oil-consuming country.
On Thursday, the International benchmark Brent reached $65.50 for a 1.77% rise after closing Wednesday at $64.34 a barrel. This trade on Thursday was close to high reached on Jan. 20 of $66.
American benchmark West Texas Intermediate (WTI) was at $61.59 per barrel at the same time for a 0.73% increase after it ended the previous session at $61.14 a barrel.
Oil prices found temporary support after weather-related shutdowns in Texas, the US’s biggest oil-producing state, forced oil producers in the region to halt production. Experts say nearly 1 million barrels per day (bpd) of oil production has been shut so far and they predict that output cuts will continue for weeks.
Hopes over a higher US pandemic relief package and positive developments about vaccine rollouts continue boosting bullish oil prices.
The House of Representatives' Budget Committee is expected to assemble a final bill in the next ten days based on measures approved by at least nine committees.
The bill is already long overdue in the early weeks of Biden's tenure in the White House and approval is expected by the Democrat-led House. But it will be a close call in the Senate with a 50-50 split where Vice President Kamala Harris could provide a tie-breaking vote.
Late Wednesday, the American Petroleum Institute (API) announced its estimate of a fall of 5.8 million barrels in US crude oil inventories relative to the market expectation of a 2.17 million-barrel build.
If crude stocks fall in line with the API’s expectations, it signals a rebound in crude demand in the US, the world's largest oil consumer, to positively support prices.
Oil prices were also supported by the Saudi oil minister’s remarks over reports that Saudi Arabia will reverse unprecedented production cuts as prices recover.
“I must warn once again against complacency,” Energy Minister Prince Abdulaziz bin Salman said Wednesday at an online conference held by the International Energy Forum in Riyadh. “The uncertainty is very high and we have to be extremely cautious. The scars from the events last year should teach us caution.”
By Sibel Morrow