Oil prices jumped by more than $1 on Feb. 23, underpinned by optimism over COVID-19 vaccine rollouts and lower output as U.S. supplies were slow to return after a deep freeze in Texas shut in crude production last week.
Shale oil producers in the southern U.S. could take at least two weeks to restart the more than 2 million bbl/d 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 $1.08, or 1.7%, at $66.32/bbl by 0437 GMT, after earlier hitting a high of $66.79. WTI crude in the U.S. rose 92 cents, or 1.5%, to $62.62/bbl, having reached a session high of $63. Both benchmarks have risen more than 2% on Feb. 23 after climbing nearly 4% in the previous session.
“The positive momentum continues in the oil complex, with investors unabashedly predisposed to a bullish view,” said Stephen Innes, chief global markets strategist at Axi in a note.
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/bbl 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/bbl in the third quarter on “signs of a much improved market” including prospects of a pick-up in demand.
“It is hard not to be bullish with oil prices now that the deep freeze disruption practically guarantees the summer pickup in crude demand will erase whatever supply glut is left,” said Edward Moya, senior market analyst at OANDA in New York.
“The global oil demand is looking a lot better now that the Pfizer vaccine shows positive results after one dose, the U.K. sees the end of the pandemic ‘in sight,’ and as hospitalizations and deaths continue to decline after peaking in early January.”
Stockpiles of U.S. crude oil and refined products likely declined last week, a preliminary Reuters poll showed on Feb. 22, due to the disruption in Texas.
Schlumberger has spent billions of dollars to take over managing customers' oil fields, in some cases becoming an investor in the fields, while seeking to profit from increased oil production.
Oil and gas operating costs in the U.S. shale basins have come down recently following a drop in crude prices, BP’s head of upstream Bernard Looney said on Feb. 5.
Deals with Schlumberger and Baker Hughes are worth $2.47 billion.