Oil prices hover around four-month high, buoyed by weak dollar and outages

LONDON: Oil prices hit their highest since late September on Wednesday after a winter storm disrupted U.S. crude output while a weak U.S. dollar and continued Kazakh outages lent further support.

At 1302 GMT, Brent crude futures ticked up 38 cents, or 0.6%, at $67.95 a barrel. U.S. West Texas Intermediate crude was up 37 cents, or 0.6%, at $62.76. Both grades are headed for their biggest monthly rises in percentage terms since July 2023, with Brent set to rise around 12% and WTI around 10%.

Both benchmarks had climbed by about 3% on Tuesday. The U.S. dollar is hovering near four-year lows against a basket of other currencies, reflecting weakness that makes dollar-denominated commodities such as oil cheaper for those holding other currencies.

The U.S. Federal Reserve is expected to hold interest rates steady with Wednesday’s decision slated to be announced at 1900 GMT.

On the supply side, exports of crude oil from U.S. Gulf Coast ports tumbled to zero on Sunday before rebounding on Monday, after a massive winter storm swept across the country, ship-tracking service Vortexa said.

Kazakh output is gradually resuming

Lost production in Kazakhstan is also underpinning the price rally, though the OPEC+ member hopes that output at the Tengiz field might resume gradually within a week. Sources, however, have said this might take longer.

Meanwhile, pipeline operator CPC, which handles about 80% of Kazakhstan’s oil exports, has restored full loading capacity at its Black Sea terminal after maintenance at a mooring point hit by drones, sources said.

On the supply side, the OPEC+ group comprising the Organization of the Petroleum Exporting Countries, Russia and other allies is set to keep its pause on oil output increases for March at a meeting on February 1, OPEC+ delegates said.

Elsewhere, U.S. officials are working to issue a general licence that would lift some sanctions on Venezuela’s energy sector, sources said, which could weigh on prices.

A U.S. aircraft carrier and supporting warships have arrived in the Middle East, U.S. officials told Reuters, adding to President Donald Trump’s capabilities to potentially take military action against Iran, which has increased concerns of supply disruptions from OPEC’s fourth-biggest crude producer.

On the demand side, U.S. crude oil and gasoline stockpiles were expected to have risen in the week ended January 23 while distillate inventories are likely to have declined, a Reuters poll showed.