Oil prices soared on Monday with the return of the US crude oil cut, demand recovering from the depths of the COVID-19 outbreak – as harsh cold weather eased – and tight supply.
Brent crude was up 33 cents, or 0.5%, at $63.24 a barrel by 0945 GMT, after gaining nearly 1% last week. Wet Texas Intermediate (WTI) oil rose 23 cents, or 0.4%, to $59.47 a barrel, having fallen 0.4% last week.
Prices also rose after the investment bank Goldman Sachs raised its Brent price forecast by $ 10 and expected it to reach $ 70 in the second quarter and $ 75 in the third. Oil prices are predicted to rise in the short term due to expected lower stocks and higher marginal costs. Better-than-expected demand and still supply under pressure create a larger-than-expected deficit.
In the states of Texas and Plains, abnormal cold weather forced the cessation of 4 million barrels of crude oil per day and 21 billion cubic feet of natural gas production. It will likely take several days for oilfield crews to defrost valves, reboot systems, and start oil and gas production.
Analysts say the US Gulf Coast refineries were assessing the damage and it could take up to three weeks to restore most of their operations, as they were hampered by low water pressure, gas and power losses.
This year’s decline in capital expenditure in US shale oil companies will continue to suppress drilling activity in the long run, causing production to remain below pre-epidemic levels.
For the first time since November, US drilling companies have reduced the number of operating oil rigs due to cold and snow-covered power generation centers in Texas, New Mexico and other power generation centers.