U.S. West Texas Intermediate crude for April was at $62.80 a barrel, down 62 cents, 0.96%.
Brent crude futures for April lost 57 cents, 0.86%, to $66.66 a barrel.
Both contracts touched their highest since Jan. 8, 2020, earlier in the session with Brent at $67.49 and WTI at $63.67. The April Brent contract expires on Friday.
An assurance from the U.S. Federal Reserve that interest rates would stay low for a while weakened the U.S. dollar, while boosting investors’ risk appetite and global equity markets.
“Comments from Fed Chairman, Jerome Powell, earlier in the week relating to the need for monetary policy to remain accommodative have probably helped, but sentiment in the oil market has also become more bullish, with expectations for a tightening oil balance,” ING analysts said in a note.
A severe winter storm in Texas has caused U.S. crude production to drop by more than 10%, or 1 million barrels per day (bpd) last week, the Energy Information Administration said on Wednesday.
“Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher,” Jeffrey Halley, senior market analyst for Asia Pacific at OANDA said.
Fuel supplies in the world’s largest oil consumer could also tighten as its refinery crude inputs had dropped to the lowest since September 2008, EIA’s data showed.
ING said U.S. crude stocks could rise in weeks ahead as production has recovered fairly quickly while refinery capacity is expected to take longer to return to normal.
The Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, is due to meet on March 4.
The group will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.
Extra voluntary cuts by Saudi Arabia in February and March have tightened global supplies and supported prices. 29dk2902l