Oil prices erased their initial gains on Thursday after Brent hit a new 13-month high. Fears that a rare, extreme cold in Texas could disrupt US crude production for days or even weeks caused this.
Brent oil was trading 0.3% higher at $64.55 a barrel after rising earlier in the day to $65.52 a barrel, its highest level since January 20, 2020.
WTI oil futures were trading 0.39% higher at $61.39 a barrel. Earlier in the day, the North American barrel rose to $62.26, a high since January 8, 2020.
The Texas cold weather extended for a sixth day on Thursday. The largest oil-producing state in the United States suffered from extended refinery blackouts. Simultaneously, oil and gas shipments were paralyzed and affected supplies in the US border with Mexico.
About 4 million barrels of daily refining capacity have been idle in the state. About one million barrels of oil per day have also stopped being pumped.
Prices per barrel were also supported by a larger-than-anticipated decline in US crude inventories.
Bjarne Schieldrop, a commodities analyst at SEB, stated that this temporary shutdown would help accelerate US crude inventories’ decline to the five-year average faster than expected.
The country’s oil stocks fell by 5.8 million barrels in the week ended February 12, to about 468 million barrels. Analysts expected a drop of 2.4 million barrels.
The government’s Energy Information Administration will release its crude and derivatives inventory data later on Thursday.
Gold prices recovered from two months low
Gold prices increased on Thursday. Spot gold gained 0.1% and was trading at $1,777.06 per ounce. Yesterday the precious metal dropped to its lowest level since November 30 and was trading at $1,768.60. Gold futures grew 0.3% to $1,777.40.
The retreat of 10-year US Treasury yields caused the increase. It boosted the opportunity cost of holding the non-yielding bullion. However, a stronger dollar kept metal’s gains in check.
The dollar rose to a more than one week high on Wednesday against rivals. It made gold expensive for holders of other currencies.
The rebound in the US retail sales caused the dollar’s recovery. Manufacturing activity increased, and US producer prices grew by the most since 2009. It suggested that inflation was starting to creep up. Traditionally, gold is a hedge against inflation.
Last month, Federal Reserve officials debated how to lay the public’s groundwork to accept higher inflation.