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Oil gains as U.S. production slowly returns after freeze

Published 02/22/2021, 09:33 AM
Updated 02/22/2021, 09:40 AM
© Reuters.
LCO
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CL
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TOKYO, Feb 22 (Reuters) - Oil prices rose on Monday as the
slow return of U.S. crude output that was cut by frigid
conditions raised concerns about supply just as demand is coming
back from the depths of the coronavirus pandemic.
Brent crude LCOc1 was up 76 cents, or 1.2%, at $61.67 a
barrel by 0104 GMT, after gaining nearly 1% last week. U.S. oil
CLc1 rose 74 cents, or 1.3%, to $59.98 a barrel, having fallen
0.4% last week.
Abnormally cold weather in Texas and the Plains states
forced the shut down of up to 4 million barrels per day (bpd) of
crude production along with 21 billion cubic feet of natural gas
output, analysts estimated.
Oilfield crews will likely take several days to de-ice
valves, restart systems and begin oil and gas output. U.S. Gulf
Coast refiners are assessing damage to facilities and may take
up to three weeks to restore most of their operations, analysts
said, with low water pressure, gas and power losses hampering
restarts. "With three quarters of fracking crews standing down, the
likelihood of a fast resumption is low," ANZ Research said in a
note.
"Longer term, the fall in capital expenditure at U.S. shale
oil companies this year will keep drilling activity subdued,
leading to output remaining below pre-pandemic levels," ANZ
said.
For the first time since November, U.S. drilling companies
cut the number of oil rigs operating due to the cold and snow
enveloping Texas, New Mexico and other energy producing centres.
RIG/U



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