Oil prices were mixed on Thursday, with U.S. crude oil reaching its highest close since 2019, as Texas refineries resumed production following last week’s freeze.
Earlier in the day, the fact that US interest rates will remain low and US crude oil production will drop sharply due to the winter storm in Texas last week has prompted both US crude oil and Brent to rise to their highest intraday prices since January 2020.
Brent futures for April delivery fell 16 cents, or 0.2%, to settle at $66.88 a barrel. The April Brent contract expires on Friday.
West Texas Intermediate (WTI) crude, meanwhile, ended 31 cents, or 0.5%, higher at $63.53, its highest close since May 2019.
The Energy Information Administration reported that cold weather reduced U.S. crude oil production by more than 10% last week, or hit a record 1 million barrels a day. Refining has dropped to levels not seen since 2008.
The more refineries return to service, the more crude oil will be processed and less crude oil will be stored.
Overall, however, price increases were seen to have slowed on Thursday.
With slowing momentum a week before the next OPEC + meeting, crude oil may be positioning for a minor correction. There are still many downside risks in the market and the most important of these is that the OPEC + union will come under pressure to increase production in the coming months.
The Organization of Petroleum Exporting Countries and its allies, including Russia, will meet on March 4.
It is inevitable that high oil prices, which have added more than 75% of value to both Brent and WTI over the past four months, will encourage US producers to return and OPEC + to ease the production cuts.
Some OPEC + sources are suggesting to stay steady for now, given the risk of new disruptions in the fight against the pandemic. However, it is argued that the group will be able to moderately relax oil supply restrictions from April and that will be the agenda of the first meeting.
It should not be overlooked that the extra voluntary cuts Saudi Arabia made in February and March tightened global supplies and boosted prices.
Meanwhile, an assurance from the US Federal Reserve that interest rates will remain low for a while helped bolster oil prices. This will likely increase investors’ risk appetite and global stock markets.
