Brent rises as harsh winter weather hits US production
The front-month ICE Brent contract has risen by $1.47/bbl on the day from Friday, to trade at $66.12/bbl at 09.00 GMT.
IMAGE: Getty Images
Upward pressure:
Oil prices have found fresh support as harsh winter weather has disrupted production across key US crude-producing regions. Around 250,000 b/d of output has been knocked offline due to severe cold, with declines reported in the Bakken field in Oklahoma and parts of Texas, Reuters reported citing JPMorgan analysts.
“Colder weather will also boost demand prospects for heating fuels, as reflected in the strength in heating oil cracks,” analysts from ING Bank said.
Beyond weather-related factors, market participants remain alert to geopolitical risks, as tensions between the US and Iran continue to unsettle sentiment.
“Further support for the oil market will be driven by lingering geopolitical risks. The US is sending ships to the Middle East, raising concerns about an escalation with Iran,” ING Bank’s analysts commented.
Downward pressure:
The total number of rigs drilling for crude oil and natural gas in the US rose by one to 544 units last week, Baker Hughes reported.
The US oil rig count is widely viewed as an indicator of future oil production, as it signals the level of current and expected drilling activity in the shale sector.
In an already oversupplied market, any indication of higher future output can weigh on Brent prices.
By Tuhin Roy
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