TOKYO: Oil prices rose further on Wednesday as supply concerns lingered and tensions in the Middle East provided further support after winter storms disrupted U.S. crude production and exports.
Brent crude oil futures rose 28 cents, or 0.4%, to $67.85 a barrel by 4:10 p.m. Japan time, while U.S. West Texas Intermediate crude oil futures rose 35 cents, or 0.6%, to $62.74 a barrel.
Both indexes rose about 3% on Tuesday.
U.S. producers lost up to 2 million barrels a day, or about 15% of national output, over the weekend as the storm strained energy infrastructure and the power grid, analysts and traders estimated.
Exports of crude oil and liquefied natural gas from U.S. Gulf Coast ports fell to zero on Sunday, according to ship tracking service Vortexa.
Fujitomi Securities analyst Toshitaka Tazawa said production losses in Kazakhstan were also supporting the rally.
“However, selling pressure is likely to return once supply concerns ease,” Tazawa said.
He added that overall, WTI could continue trading at around $60 a barrel for some time, as global crude oil supplies are expected to be in surplus this year amid geopolitical risks including tensions in the Middle East.
Kazakhstan’s largest Tengiz oil field is slowly recovering from a fire and power outage and is likely to have recovered less than half of its normal production by February 7, two sources familiar with the matter said.
This offset comments from pipeline operator CPC, which handles about 80% of Kazakhstan’s oil exports, that it had returned the Black Sea terminal to full loading capacity after completing maintenance at one of its three mooring points.
Supply concerns remain amid moderate tensions
A U.S. aircraft carrier and support warships have arrived in the Middle East, two U.S. officials told Reuters on condition of anonymity on Monday, making it more likely that President Donald Trump will defend U.S. forces or take military action against Iran.
This makes it more likely that President Trump will follow through on his threat to attack senior Iranian leadership in response to the violent crackdown on protests nationwide, ANZ analysts said in a note.
On the supply side, the Organization of the Petroleum Exporting Countries, Russia and other allies (OPEC+) will continue to suspend oil production increases in March at their Feb. 1 meeting, three OPEC+ representatives said.
U.S. crude oil and gasoline inventories are expected to rise in the week ending Jan. 23, while distillate stocks are likely to decline, according to an extended Reuters poll on Tuesday.
But market watchers, citing American Petroleum Institute statistics on Tuesday, said U.S. crude oil and gasoline inventories fell last week, while distillate inventories rose. (Reporting by Yuka Obayashi in Tokyo and Emily Chow in Singapore; Editing by Jamie Freed and Neil Frick)
