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 was up 76 cents, or 1.2%, at $61.67 a barrel by 0104 GMT, after gaining nearly 1% last week. U.S. oil 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.