Oil rallied to a 13-month high as cold weather in Texas disrupted flows from America’s largest shale patch, exposing the fragility of global supplies amid sharp cutbacks by the Organisation of Petroleum Exporting Countries (OPEC) and its allies.
The Arctic blast gripping the U.S. is threatening to crimp crude supplies and unleash a rush for everything from propane to heating oil, fuels that are used in mobile heating devices.
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In the past few weeks, harsh winter conditions across North Asia and parts of Europe have pushed some oil-product markets into a bullish backwardation structure. It comes amid a market that’s now “balanced” with prices reflecting the current state of play, said Russia’s deputy prime minister Alexander Novak.
According to Bloomberg, West Texas Intermediate (WTI) has climbed about 16 per cent since the start of February and Brent posted four straight weeks of gains after Saudi Arabia led the Organization of Petroleum Exporting Countries and its allies in deep output cuts this year, causing once-swollen global stockpiles to rapidly normalize.
“Energy prices have got another boost as a result of extremely cold weather in the U.S.,” said Warren Patterson, head of commodities strategy at ING Group.