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SINGAPORE: Oil prices climbed on Friday, extending sharp gains in the previous session sparked by persistent supply concerns and as frigid weather cascades across the United States, threatening to further disrupt fragile oil supplies.
Brent crude was up 16 cents, or 0.2%, to $91.27 a barrel by 0102 GMT, after rising $1.16 on Thursday.
U.S. West Texas Intermediate crude rose 28 cents, or 0.3%, to $90.55 a barrel, having gained $2.01 cents the previous day to settle above $90 for the first time since Oct. 6, 2014.
Both benchmarks are headed for their seventh straight weekly gain.
“WTI crude surged over the $90 level after an Arctic blast made its way to Texas and disrupted some oil production in the Permian Basin,” said Edward Moya, senior market analyst at OANDA.
A massive winter storm swept across the central and Northeast United States on Thursday where it was delivering heavy snow and ice, making travel treacherous if not impossible, knocking out power to thousands and closing schools in several states.
Faced with recovering demand that is outpacing supply, oil markets are increasingly vulnerable to supply shocks, analysts said.
“Even as thousands of flights are cancelled, the energy market is fixated over production and not so much short-term demand shocks,” said Moya.
Geopolitical tensions in Eastern Europe and the Middle East have also fuelled oil’s sharp gains which have pushed Brent futures up by 17% and WTI by 20% so far this year.
The United States warned that Russia was planning to use a staged attack as justification for invading the neighbouring nation. Russia’s President Vladimir Putin has blamed NATO and the West for increased tensions, even as he has moved thousands of troops near to Ukraine’s border.
Over the medium term, however, some analysts expect the oil market to flip into surplus as soon as next quarter, helping put the brakes on the recent surge in prices.
“We expect the sequential trend of quarterly global stock draws will flip to inventory builds as soon as 2Q’22, and sustain for the next 15-18 months,” analysts at Citi Research said in a note late on Thursday.
“Our view is for a tight crude oil market to shift to surplus outright and in terms of days of demand cover.”