Oil futures climbed Wednesday, with U.S. prices settling above $60 a barrel for a second straight session, as freezing weather extending as far south as Texas continues to shut in production and keep refineries closed.

Oil prices have moved up because of Saudi Arabia’s voluntary production cuts and an acceleration in the COVID-19 vaccine rollout, as well as some loss of production in the Permian, said Michael Lynch, president of Strategic Energy & Economic Research.

However, the oil market is “probably only going to lose about 10 million barrels of production, and U.S. inventories have been running about 50 million barrels above normal, so the impact isn’t too big,” he told MarketWatch. “More important is the loss of refined product production due to refinery shutdowns, which has goosed product prices.”

The national average price for gasoline at the pump may climb by 10 cents to 20 cents a gallon from the current price of around $2.54 over the next two weeks, with millions of barrels of refining capacity offline due to the extreme cold in the South, GasBuddy said Wednesday.

Power outages caused several Texas refineries to shut down or reduce operations, with at least 2.6 million barrels per day confirmed to be shutting down entirely, out of a total of roughly 5.9 million barrels per day of refining capacity in the state, according to a late Tuesday report from S&P Global Platts Analytics.

The frigid temperatures have also reduced U.S. crude and natural-gas production, though most of the projected 3 million to 4 million barrels per day of downed oil output could be restored by the weekend, the report said.

Read: Texas power disaster may be strongest case yet for renewable energy

West Texas Intermediate crude for March delivery
CL.1,
+1.97%

CLH21,
+1.97%
,
the U.S. benchmark, rose $1.09, or 1.8%, to settle at $61.14 a barrel on the New York Mercantile Exchange, a day after closing above $60 for the first time since January 2020. Prices notched a third consecutive session gain.

April Brent crude
BRN00,
+0.14%

BRNJ21,
+0.14%
,
the global benchmark, climbed 99 cents, or 1.6%, to $64.34 a barrel on ICE Futures Europe.

Natural-gas futures gained Wednesday after Tuesday’s climb of more than 7%, with the contract up 2.9% at $3.219 per million British thermal units for the highest settlement since Nov. 2.

Read: U.S. deep freeze prompts natural-gas rally, and uranium prices melt up

The shutdown of refineries was seen pushing WTI oil into contango, a condition in which nearby oil prices trade below later dated futures, for the first time in more than seven months, noted analysts at Commerzbank.

Among the petroleum products traded on Nymex, March gasoline
RBH21,
+2.28%

rose 2.1% to $1.8105 a gallon and March heating oil
HOH21,
+1.44%

added 1.3% to $1.8377 a gallon.

The deep freeze has accelerated a rally in crude driven by optimism over vaccine rollouts and falling COVID-19 cases, which boosted expectations for a broader economic recovery.

Output cuts by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, have also contributed to the positive tone, enhanced by Saudi Arabia’s unilateral decision to cut its production by 1 million barrels a day in February and March.

The crude rally, however, is seen leading to pressure to further relax output curbs, perhaps as early as meetings in early March.

Saudi Arabia plans to announce a reversal of its unilateral output cuts when OPEC+ meets next month amid the recent recovery in oil prices, The Wall Street Journal reported Wednesday, citing comments from advisers to the kingdom.

Meanwhile, weekly data on petroleum supplies have been delayed by a day following the Presidents Day holiday on Monday. The Energy Information Administration will issue its data Thursday morning.

Analysts expect the report, on average, to show a decline of 3.4 million barrels in U.S. crude supplies for the week ended Feb. 12, according to an S&P Global Platts survey. They also forecast a climb of 2.2 million barrels in gasoline stocks and a fall of 2.2 million barrels in distillate inventories.



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