Oil prices rise as harsh winter disrupts US output

LONDON: Oil prices edged higher on Monday after climbing more than 2% in the previous session, as output disruptions in major U.S. crude-producing regions and tensions between the U.S. and Iran boosted prices.

Brent crude futures rose 7 cents, or 0.1%, to $65.95 a barrel at 1107 GMT. U.S. West Texas Intermediate crude was at $61.10 a barrel, up 3 cents, or 0.1%.

Both benchmarks notched weekly gains of 2.7% to close on Friday at their highest points since January 14.

“Winter storm Fern struck the U.S. coast, forcing shut-ins in major crude and natural gas producing regions and adding stress to the power grid,” said Priyanka Sachdeva, senior market analyst at Phillip Nova, adding that oil markets are experiencing a mild upswing as outages tighten physical flows.

About 250,000 barrels per day of crude production has been lost in the U.S. due to harsh weather, including declines in the Bakken field in Oklahoma and parts of Texas, JPMorgan analysts said in a note on Monday.

Traders are also wary of geopolitical risks, analysts said, as tensions between the U.S. and Iran kept investors on edge.

President Donald Trump said last week that the U.S. has an “armada” heading toward Iran but hoped he would not have to use it, as he renewed warnings to Tehran against killing protesters or restarting its nuclear program.

“Unusually cold U.S. winter weather with higher heating oil demand and likely U.S. oil supply outages was probably part of the bullish drive at the end of last week, but U.S. threats towards Iran with USS Abraham Lincoln being deployed to the Middle East was probably more important,” an SEB research note said on Monday.

On Friday, a senior Iranian official said Iran would treat any attack “as an all-out war against us.”

Separately, Kazakhstan’s Caspian Pipeline Consortium said it returned to full loading capacity at its terminal on the Black Sea coast on Sunday after completing maintenance at one of its three mooring points.

And Tengizchevroil, which operates Kazakhstan’s giant Tengiz oilfield, has begun a gradual resumption of production after an extended outage, it said on Monday.