Oil near new highs as icy weather freezes Texas production

London — Oil prices hovered near 13-month highs on Tuesday on the back of a cold snap shutting wells in Texas, the biggest crude-producing state in the US, while a wage deal in Norway averted outages in Europe, capping gains.

Prices also gained after Yemen’s Iran-aligned Houthi group said it had launched attacks on Saudi Arabia, raising supply concerns in the world’s biggest oil exporter, while vaccine-driven optimism over a global economic recovery from the Covid-19 pandemic was also supportive.

US West Texas Intermediate (WTI) crude futures gained 41c, or 0.7%, to $69.88 a barrel by 8.36am GMT, after touching their highest since early January 2020. US markets were closed on Monday because of a US federal holiday.

Brent crude was down 7c, or 0.1%, at $63.23 a barrel after hitting its highest since January 2020 in the previous session.

The cold weather in the US halted Texas oil wells and refineries on Monday and forced restrictions on natural gas and crude pipeline operators, leaving about 4 million homes and businesses without power.

Texas produces roughly 4.6-million barrels of oil a day and is home to 31 refineries, the most of any US state, according to Energy Information Administration (EIA) data, including some of the country’s largest.

In the Middle East, the Saudi-led coalition fighting the Houthis in Yemen said on Monday that it had intercepted and destroyed an explosive-laden drone fired by the Houthis towards the kingdom.

Also on Monday, the World Health Organization (WHO) listed AstraZeneca and Oxford University’s Covid-19 vaccine for emergency use, widening access to the relatively inexpensive shot in the developing world.

Capping prices gains, Norway’s oil industry employers struck a wage bargain with the Safe labour union on Tuesday, preventing a strike at the Mongstad crude terminal and shutdowns of major offshore oil and gas fields.

Reuters