Oil futures ended mixed on Tuesday, with US prices dropping a few cents and world benchmark Brent crude barely hitting a new 13-month high. Traders watched the pace of recovery in energy production from Texas in the wake of last week’s winter storms, as well as speculation surrounding a production decision by major oil producers next week.
“The short-term focus is on getting Texas operations back to normal after extreme winter conditions caused a temporary drop in US crude production of about 40%,” said Robbie Fraser, manager of analysis and Schneider Electric Global Research. “While most production should be able to get a quick return, refineries face a more challenging path, with potential damage to infrastructure that complicates a full recovery.” Still, “further downside risk remains pronounced with millions of barrels from OPEC + and possible US shale production awaiting a return,” he said in a note. The Organization of the Petroleum Exporting Countries and its allies, known together as OPEC +, will hold meetings next week and are expected to make a decision on oil production levels. However, “for now, the market remains focused on a stronger-than-expected recovery in global demand,” Fraser said. In its first full session as a first-month contract, April West Texas Intermediate crude CL. 1, + 0.41% CLJ21, + 0.41% fell 3 cents, or almost 0.1%, to settle at $ 61.67 a barrel on the Mercantile Exchange New York after trading as high as $ 63. April Brent crude BRNJ21, + 0.47%, the global benchmark, rose 13 cents, or 0.2%, to $ 65.37 a barrel on ICE Futures Europe, the most recent result. High since January 2020. Most active May Brent crude BRNK21, + 0.43% BRN00, + 0.43%, to become the first month’s contract after Friday’s settlement, was up 12 cents, or 0.2 %, at $ 64.48 a barrel. There is a “growing view that the oil market looks tighter and tighter for the rest of the year, with several analysts revising their price forecasts upward over the past week, including us,” said Warren Patterson, chief executive officer. of ING’s raw materials strategy. , on a note. Goldman Sachs raised its forecasts on Monday, calling for Brent to hit $ 75 a barrel by the end of the year. Last week, ING raised its 2021 forecast for the global benchmark, raising its outlook to $ 65 a barrel from its previous forecast of $ 60 a barrel. In a note dated Monday, analysts at BofA Securities said they have raised their average forecast for Brent crude to $ 60 this year and that prices may temporarily rise to $ 70 in the second quarter. In June, analysts expected an average price of $ 50 for Brent crude in 2021, with a possible increase to $ 60 in the second quarter. Meanwhile, “the situation in Texas, which is home to many oil production and processing facilities, is concerning: the freezing temperatures and the power and gas supply cuts that this has required have paralyzed virtually all of Texas’ refineries, which they have a daily production of up to 5.1 million barrels and represent more than a quarter of the total capacity of the US refineries, “Eugen Weinberg, Commerzbank’s commodities analyst, said in a note. “So far, less than half have returned to work, which will likely affect supply both within and outside of Texas. It will probably take longer for Texas oil production to return to normal, ”he said. Still, Commerzbank maintains that optimism is too optimistic and sees room for prices to decline after the rapid rise. “On the one hand, we are still somewhat skeptical about demand, and on the other, the production discipline shown by OPEC + is likely to falter in the face of high prices,” Weinberg said. “We also see a good chance that Iranian oil exports will return to the market if a deal can be reached with the United States and sanctions are lifted.” Back at Nymex, the prices of petroleum products settled slightly higher. March gasoline RBH21, + 1.24% increased 0.9% to $ 1.8586 a gallon and March HOH21 heating oil, + 0.73% added 0.5% to $ 1.868 a gallon. Read: Gasoline Prices Post Longest Gain Streak Since Hurricane Harvey The Energy Information Administration will release its weekly data on US oil supplies on Wednesday. On average, analysts surveyed by S&P Global Platts forecast a 4.8 million barrel decline in crude reserves for the week ending February 19. They also expect reductions in supply of 2.8 million barrels of gasoline and 3.5 million barrels of distillates. March NGH21 natural gas, -2.37%, due at the end of Wednesday’s session, closed at $ 2,879 per million British thermal units, a decrease of 2.5%.