Oil gives up gains after rising above $65 on Texas freeze

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 US crude output for days or even weeks prompted fresh buying.

Brent crude was down $0.03 at $64.31 a barrel at 1046 GMT, after rising to $65.52 earlier in the session, its highest since January 20, 2020.

US West Texas Intermediate (WTI) crude futures eased $0.04 to $61.10 a barrel, after earlier rising to $62.26, the highest since January 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 (bpd) of oil production is also out.

“The temporary outage will help to accelerate US oil inventories down towards the five-year average quicker than expected,” said SEB chief commodities’ analyst Bjarne Schieldrop.

Prices also gained support from a larger-than-anticipated draw in the US crude oil inventories.

US crude oil stocks fell by 5.8 million barrels in the week to February 12 to about 468 million barrels, compared with analysts’ expectations for a draw of 2.4 million barrels, American Petroleum Institute data showed.

US 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 Organisation 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.