Oil has been supported by OPEC+ supply curbs, Saudi Arabia's additional cuts and hopes of a demand rebound due to COVID-19 vaccinations.
Historic cold weather since the weekend in Texas, which supplies the bulk of U.S. crude and is part of the main U.S. refining hub, has propelled prices even higher.
"This has just sent us to the next level," said Bob Yawger, director of energy futures at Mizuho in New York. "Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%," Yawger said.
The U.S. deep freeze should disrupt production for several days if not weeks, industry experts said, as wellheads have frozen over and pipelines have shut.
At least a fifth of U.S. refining output has been knocked offline, which is hampering demand for crude at the same time production is down, said John Kilduff, partner at Again Capital in New York.
"There's a bit of a push pull happening because even though the supplies are shut in, the refiners are also down so there's not much of a call for it," Kilduff said.
Brent and WTI rose more than $1 during the session, hitting their highest level since January 2020. Prices pared gains after the Wall Street Journal reported that Saudi Arabia was expected to announce plans to raise output when OPEC and allied oil producers meet next month.
But Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said it was too early to declare victory against the COVID-19 virus and that oil producers must remain "extremely cautious".
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+ sources told Reuters that the group's producers are likely to ease curbs on supply after April given a recovery in prices.
U.S. oil inventory data from the American Petroleum Institute and the U.S. Energy Information Administration (EIA) will be released on Wednesday and Thursday respectively, both delayed a day after Monday's holiday.
Analysts polled by Reuters estimated, on average, that crude stocks fell 2.4 million barrels last week.
(GRAPHIC: OPEC+ base case scenario - https://fingfx.thomsonreuters.com/gfx/mkt/xegpbwmqzvq/opecdeficit.png)
(Additional reporting by Bozorgmehr Sharafedin in London, Sonali Paul and Shu Zhang in Singapore; Editing by Marguerita Choy and David Gregorio)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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