U.S. West Texas Intermediate (WTI) crude futures dipped 28 cents, or 0.47% to $59.84 a barrel, retreating from a 13-month high of $60.95 hit on Tuesday.
Oil prices have run up strongly in recent months and supply disruptions caused by a historic winter storm in Texas, the country’s largest oil producing state, continued to keep prices supported, analysts said.
ANZ and Citigroup analysts estimated at least 2 million barrels per day (bpd) of U.S. shale oil production has been curtailed. Citi estimated a cumulative production loss of around 16 million barrels through early March.
But the extreme cold has also hit crude demand due to disruptions to refinery operations. Chevron Corp’s 112,229 barrel-per-day (bpd) Houston-area refinery in Pasadena, Texas, was shut on Tuesday, the company said.
Both oil futures dipped in early morning trade due to pressure from a stronger U.S. dollar and a potential output increase from the Organization of the Petroleum Exporting Countries and allies, known as OPEC+.
OPEC+ oil producers are likely to ease curbs on supply after April given a recovery in prices, OPEC+ sources told Reuters, although any increase in output will be modest as producers are wary of fresh setbacks in the battle against the pandemic.
Saudi Arabia’s voluntary cut of 1 million barrels per day (bpd) ends next month. While Riyadh hasn’t shared its plans beyond March with its OPEC+ partners, expectations in the group are growing that Saudi Arabia will bring back the supply from April, perhaps gradually.
The OPEC+ group will meet to set policy on March 4.
“We’re in a technical holding pattern supported by fundamental on the downside and top side capped ahead of March OPEC (meeting),” said Stephen Innes, Axi chief market strategist.
U.S. oil inventory data from the American Petroleum Institute industry group and the Energy Information Administration (EIA) will be released on Wednesday and Thursday respectively, delayed by a U.S. holiday on Monday.
Analysts polled by Reuters estimated, on average, that crude stocks fell 2.2 million barrels in the week to Feb. 12. 29dk2902l