Oil jumps over 1% on US storm disruption, Kazakh oilfield’s slow restart

LONDON: Oil prices jumped over 1% on Tuesday as a massive winter storm hit crude production and affected refineries on the U.S. Gulf Coast, with the market also finding support from the slow restart of output from the Tengiz oilfield in Kazakhstan.

Brent crude futures were up 90 cents or 1.4%, at $66.49 a barrel by 1415 GMT. U.S. West Texas Intermediate crude was up 87 cents or 1.4%, at $61.50 a barrel.

The U.S. faced a loss of production as a severe winter storm swept across the country, straining energy infrastructure and power grids.

U.S. oil producers lost up to 2 million barrels per day or roughly 15% of national production over the weekend, analysts and traders estimated.

“Cold weather in the U.S. could move oil production lower for a bit longer and the recovery of Tengiz production seems to be happening slower than earlier expected, keeping the oil market tighter,” said Giovanni Staunovo, an analyst at UBS, adding that the weaker U.S. dollar was lending some support.

Cold weather to spur draw down in stocks

“The cold weather in the U.S. will likely cause quite significant drawdowns in oil stocks over the next few weeks, particularly if this weather persists,” said Tamas Varga, an oil analyst at brokerage PVM. This could boost prices in the coming days, he said.

Meanwhile, Kazakhstan’s biggest oilfield, Tengiz, is likely to restore less than half of its normal production by February 7 as it slowly recovers from a fire and power outage, two sources familiar with the matter told Reuters.

However the CPC, which operates Kazakhstan’s main exporting pipeline, said it returned to full loading capacity at its terminal on the Russian Black Sea coast after maintenance was completed at one of its three mooring points.

Some traders are also likely to be taking profit on heating oil, which has risen sharply in recent days due to the cold weather in the U.S., PVM’s Varga said.

Supply risks persist due to Mideast tensions

On the geopolitical front, a U.S. aircraft carrier and supporting warships have arrived in the Middle East, two U.S. officials told Reuters on Monday, expanding President Donald Trump’s capabilities to defend U.S. forces, or potentially take military action against Iran.

“Supply risks haven’t totally evaporated… Tension in the Middle East persists after President Trump dispatched naval assets to the region,” said Daniel Hynes, an analyst at ANZ.

Further on the supply front, the OPEC+ grouping is set to keep its pause on oil output increases for March at a meeting on February 1, three OPEC+ delegates told Reuters.