Oil prices jump more than $1 on slow U.S. output restart

Tuesday,   23-Feb-2021   08:51 AM (IST)

Oil prices jumped by more than $1 on Tuesday, as U.S. output was slow to return after a deep freeze in Texas shut in crude production last week. Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output that shut down because of cold weather, as frozen pipes and power supply interruptions slow their recovery, sources said. Brent crude was up $1.06, or 1.6%, at $65.30 a barrel by 0204 GMT, after earlier hitting a high of $66.38. U.S. crude rose 81 cents, or 1.4%, to $62.51 a barrel, after hitting a session high of $62.73. Both benchmarks have risen more than 1% after climbing nearly 4% in the previous session. Goldman Sachs Commodities Research raised its Brent crude oil price forecasts by $10 for the second and third quarters of 2021, citing lower expected inventories, higher marginal costs to restart upstream activity and speculative inflows. The Wall Street bank expects Brent prices to reach $70 per barrel in the second quarter from the $60 it predicted previously and $75 in the third quarter from $65 earlier. Morgan Stanley expects Brent crude prices to climb to $70 per barrel in the third quarter on “signs of a much improved market” including prospects of a pick-up in demand. Stockpiles of U.S. crude oil and refined products likely declined last week, a preliminary Reuters poll showed on Monday, due to the disruption in Texas.