OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to agreed reductions under a pact with allies, a Reuters survey found on March 1, ending a run of seven consecutive monthly increases.
Analysts said WTI crude increased late in the day as more Texas oil refineries started to return to service, including Valero Energy’s Port Arthur plant and Citgo Petroleum’s Corpus Christi plant.
Overall U.S. crude oil output fell by 1.1 million bbl/d to 9.7 million bbl/d in the week to Feb. 19, the EIA said, as Texas’ deep freeze forced most of the state’s operators and refiners to shut as components and pipelines froze.
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.
The winter storm that gripped Texas and much of the country over the past week forced the biggest ever weather-related shutdown in the Permian Basin, cutting 2 million to 4 million bbl/d from nationwide oil output.
Key questions for the OPEC+ meeting will be whether Saudi Arabia rolls back its voluntary cut of 1 million bbl/d and whether there is room for an additional increase in supply from the whole oil producer group.
After the increase during the past two weeks of Brent by 12.2% and WTI by 14.4%, crude prices are now back to the range they were for much of 2019 and more developments are on the way, Stratas Advisors says in its latest oil price forecast.
The lack of a U.S. shale rebound could make it easier for OPEC and its allies to manage the market, according to OPEC sources.
The refinery shutdowns will depress prices for U.S. crude oil and widen the spread between U.S. and Brent crude, Paul Sankey of independent energy researcher Sankey Research said.