Investing.com – Oil was up Monday morning in Asia, as production that was cut by an unprecedented cold snap in Texas and the surrounding areas during the previous week slowly returned. Also giving the black liquid a boost is progress against the COVID-19 pandemic, in turn booting hopes for fuel demand recovery.
Brent oil futures jumped 1.13% to $62.84 by 11:09 PM ET (4:09 AM GMT), with the Brent contract rolling over on Feb. 21 to the May 21 contract. WTI futures rose 1.08% to $59.90, and the WTI contract rolled over on Feb. 21 to the Apr. 21 contract.
The cold snap in the U.S. saw an estimated four million barrels per day (bpd) of crude production shut down in Texas and the Plains states, alongside 21 billion cubic feet of natural gas output.
It will likely take several more days for oilfield crews to de-ice valves, restart systems and get production ticking again. Producers are also taking stock of the damage caused by the weather and could take up to three weeks to restore most of their operations. Low water pressure, gas and power losses are also hampering restarts.
“With three quarters of fracking crews standing down, the likelihood of a fast resumption is low. Longer term, the fall in capital expenditure at U.S. shale oil companies this year will keep drilling activity subdued, leading to output remaining below pre-pandemic levels,” ANZ Research said in a note.
U.S. drilling companies also cut the number of oil rigs operating for the first time since November, due to the cold and snow in Texas, New Mexico and other energy producing centers.