Oil rises after data shows slump in U.S. output amid Texas freeze | Reuters

Oil rises after data shows slump in U.S. output amid Texas freeze | Reuters

Oil prices climbed on Wednesday to fresh 13-month highs after U.S. government data showed a drop in crude output after a deep freeze disrupted production last week.

U.S. crude oil production dropped last week by more than 10%, or 1 million barrels per day, during the rare winter storm in Texas, equaling the largest weekly fall ever, the Energy Information Administration said. Refinery crude inputs dropped to the lowest since September 2008 as the freeze knocked out power to millions. [EIA/S]

“If you’re getting that kind of drop in one week of EIA production, you’re likely to get more after that,” said Phil Flynn, senior analyst at Price Futures in Chicago.

“There is some concern that this will be a long-term permanent production drop.”

Traffic at the Houston ship channel was slowly coming back to normal but terminals were still facing several issues. After nearly a quarter of national refining capacity was idled by the freeze, refineries have also started to come back online this week.

Brent crude futures rose $1.67, or 2.6%, to settle at $67.04 a barrel. The global benchmark hit a session high of $67.30 a barrel, its loftiest since Jan. 8, 2020.

U.S. West Texas Intermediate (WTI) crude futures ended $1.55, or 2.5%, higher at $63.22 a barrel, after touching $63.37, also their highest since Jan. 8, 2020.

The rally continued oil’s steady march to levels not seen since prior to the coronavirus pandemic as vaccine distribution increases and on forecasts for renewed demand.