LONDON: Oil prices were mixed on Wednesday, underpinned by a major supply disruption in the southern United States this week where a winter storm hit Texas, but pressured by reports that Saudi Arabia plans to increase output in the coming months.
Oil has been supported in the past few weeks by OPEC+ supply curbs, Saudi Arabia’s additional cuts and hopes of a demand rebound due to COVID-19 vaccinations.
Severe cold weather in Texas, the largest US oil producing state, has also boosted prices in recent days.
The US deep freeze is expected to disrupt production for several days if not weeks, industry experts said, as wellheads have frozen and refineries have been shut.
Brent and WTI rose more than $1 earlier in the day, hitting their highest level since January 2020.
But Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said on Wednesday that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.
“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.
The stronger price environment has put more attention on OPEC+, which groups OPEC, Russia and allied producers. It meets to set policy on March 4.
OPEC+ oil producers are likely to ease curbs on supply after April given a recovery in prices, OPEC+ sources told Reuters.
“We believe that OPEC+ will likely take a more conservative approach, and ease output more modestly,” said ING analyst Warren Patterson.
US oil inventory data from the American Petroleum Institute and the US Energy Information Administration (EIA) will be released on Wednesday and Thursday respectively, a one-day delay for each after this week’s US holiday.
Analysts polled by Reuters estimated, on average, that crude stocks fell 2.2 million barrels in the week to Feb. 12.