Oil prices soared more than 1% on Tuesday as a major winter storm hit oil production and affected refineries on the U.S. Gulf Coast, and the market also received support from the slow restart of production from Kazakhstan’s Tengiz field.
Brent crude oil futures rose 90 cents, or 1.4%, to $66.49 a barrel at 1415 GMT. U.S. West Texas crude rose 87 cents, or 1.4%, to $61.50 a barrel.
The United States faced production losses as severe winter storms battered the country, straining energy infrastructure and power grids. U.S. oil producers lost up to 2 million barrels a day, or about 15% of national output, over the weekend, analysts and traders estimated.
“Oil markets remain tight as the cold snap in the US could hold oil production back for a little while longer, and the recovery in Tengiz production appears to be slower than initially expected,” said UBS analyst Giovanni Staunovo, adding that the weaker US dollar is providing some support.
Cold wave spurs stock price decline
“The cold weather in the U.S. is likely to cause a fairly significant decline in oil inventories in the coming weeks, especially if this weather continues,” said Tamas Varga, an oil analyst at brokerage PVM. This could cause prices to rise within days, he said. Meanwhile, Kazakhstan’s largest oil field, Tengiz, is slowly recovering from a fire and power outage and is likely to have recovered less than half of its normal output by February 7, two sources familiar with the matter told Reuters.
However, CPC, which operates Kazakhstan’s main export pipeline, announced that loading capacity at the terminal on Russia’s Black Sea coast was back to full capacity after maintenance was completed at one of the three mooring points.
PVM’s Varga said some traders are also likely looking to take profits in heating oil, which has soared in recent days due to the cold snap in the United States.
Supply risks continue due to moderate tensions
On the geopolitical front, a U.S. aircraft carrier and supporting warships have arrived in the Middle East, expanding President Donald Trump’s ability to defend the U.S. military or the possibility of military action against Iran, two U.S. officials told Reuters on Monday.
“Supply risks have not completely disappeared… tensions in the Middle East continue even after President Trump sent naval assets to the region,” said ANZ analyst Daniel Hynes. Further on the supply side, the OPEC+ group plans to continue suspending oil production increases in March at its Feb. 1 meeting, three OPEC+ representatives told Reuters.
(Reporting by Anna Hirtenstein and Seher Dareen in London; Additional reporting by Jeslyn Lerh in Singapore; Additional reporting by Anushree Mukherjee in Bengaluru; Editing by Bernadette Baum)
