Oil drops as investors gauge big chill impact on US refineries
MELBOURNE (Reuters) - Oil prices slid as much as 2% in early trade on Friday, adding to overnight declines, on worries that refineries shut by a big freeze in the US South will take some time to revive operations and dent crude demand.
US West Texas Intermediate (WTI) crude futures fell $1.21, or 2%, to $59.31 a barrel at 0157 GMT, after declining 1% on Thursday. Brent crude futures dropped $1.07, or 1.7%, to $62.86 a barrel, after declining 0.6% on Thursday.
“The market is concerned about the refinery outages in Texas, where arctic weather has caused power outages and frozen wells and pipes,” ANZ Research said in a note.
The lack of demand from refineries will likely lead to builds in crude stocks over coming weeks, even though around 3.5 million barrels per day (bpd) of U.S. oil output has been shut, ANZ said.
“Refinery outages could be deeper and longer lasting, especially ahead of the spring maintenance season, as some plants could decide to anticipate planned turnarounds of roughly 500-k b/d on aggregate over the next month,” Citi analysts said.
U.S. crude stockpiles fell more than expected in the week to Feb. 12, before the freeze, with inventories down by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday.
