MELBOURNE (Reuters) – Oil prices will slip as much as 2% in early trading on Friday, contributing to an overnight decline, amid concerns that refineries closed by severe frosts in the U.S. may take some time to regenerate operations and demand raw teeth.
U.S. West Texas Intermediate (WTI) crude futures fell $ 1.21, or 2%, to $ 59.31 a barrel at 0157 GMT, after falling 1% Thursday.
Brent crude futures fell $ 1.07, or 1.7%, to $ 62.86 a barrel, after falling 0.6% Thursday.
Both benchmark contracts rose to 13-month highs Thursday led by the historic freeze in the southern U.S. states. While analysts predict that the extreme cold has shut down as much as a third of U.S. crude production, attention has now turned to the impact on refiners.
“The market is concerned about the eruptions 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 refiners is likely to lead to a rise in crude stocks over the next few weeks, even as about 3.5 million barrels per day (bpd) of U.S. oil production has closed, ANZ.
Citi analysts said in a note that some U.S. refineries could carry out maintenance work normally scheduled for spring, ahead of the summer driving season.
“Refinery yields could be deeper and longer, especially ahead of spring maintenance, as some plants may decide to expect a planned turnover of around 500. -kb / d on suit over the next month, ”said Citi analysts.
U.S. crude stocks fell more than expected in the week to Feb. 12, before freezing, with deposits down 7.3 million barrels to 461.8 million barrels, the lowest level since March, the Energy Information Administration reported on Thursday.
Reciting with Sonali Paul; Edited by Tom Hogue