gained as traders weighed the return of U.S. crude production that was hit by freezing temperatures across Texas last week, against weaker refinery demand as plants impacted by related power outages resume operations.
Futures in London rose above $63 a barrel after falling more than 2% over the previous two sessions. Producers including Marathon Oil Corp (NYSE:MRO). have begun using restored power from local grids or generators to restart output, people familiar with the matter said Friday. Four of the largest refineries in Texas, however, expect to be down for weeks of repairs after widespread damage.
Saudi Arabia and Russia, meanwhile, are heading toward an OPEC+ meeting next week with differing opinions about adding more supply to the market in April. Iran will also start restricting snap inspections of its nuclear sites this week and is calling on the U.S. to end sanctions if it wants talks.
Oil is up more than 20% this year after a pledge last month by Saudi Arabia to deepen output cuts accelerated a rally triggered by Covid-19 vaccine breakthroughs. Brent’s prompt timespread has firmed in a bullish backwardation structure, signaling a tighter market and helping to unwind stockpiles built up during the pandemic.
Saudi Arabia is publicly urging fellow members to be “extremely cautious” and has signaled in private it would prefer that OPEC+ broadly holds output steady, according to delegates. Moscow, on the other hand, is indicating that it still wants to proceed with a supply increase. The group meets March 4.