Oil futures extended their rise Thursday as Texas faced a fourth day of blackouts due to a deep freeze that is estimated to have also shut in around 40% of U.S. crude output, while also closing a number of refineries.
“It has become clearer that the impact from this cold weather has been much more severe than the market was initially expecting,” said Warren Patterson, head of commodities strategy at ING, in a note.
West Texas Intermediate crude for March delivery CL.1, +0.56% CLH21, +0.56% rose 37 cents, or 0.6%, to $61.51 a barrel on the New York Mercantile Exchange after pushing above $62 in earlier action. April Brent crude BRN00, +0.45% BRNJ21, +0.45%, the global benchmark, was up 40 cents, or 0.6%, at $64.74 a barrel on ICE Futures Europe.
Around 4 million barrels a day of U.S. output has been knocked offline as a result of the storms that have hit the state, according to Bloomberg.
At the same time, the weather is also hitting demand for crude, with an estimated 3.6 million barrels a day of refining capacity idled, Patterson noted. For now, however, output losses appear to exceed the fall in refinery operating rates, he said.
Natural-gas futures NGH21, -1.52% were off 0.2% at $3.216 per million British thermal units, but have rallied more than 10% so far this week in response to the freeze.
Storage data will also be in focus Thursday, after the American Petroleum Institute, an industry group, late Wednesday said U.S. crude supplies fell by 5.8 million barrels in the week ended Feb. 12, according to sources.
The data, delayed by a day due to the Presidents Day holiday, also reportedly showed gasoline stockpiles climbed by 3.9 million barrels, while distillate inventories declined by 3.5 million barrels. Crude stocks at the Cushing, Okla., storage hub, meanwhile, edged down by 3 million barrels for the week, sources said.
More closely followed inventory data from the Energy Information Administration will be released Thursday. On average, the EIA is expected to show crude inventories down by 3.4 million barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also shows expectations for an inventory increase of 2.2 million barrels for gasoline and a decline of 2.2 million barrels for distillates.
Inventory data in coming weeks is expected to be distorted by the storms.