OIL
Picnews
Oil prices are rising due to harsh winter weather disrupting US production. Brent crude futures jumped 0.7% to $66.30 a barrel, while US West Texas Intermediate crude was up 0.7% at $61.49 a barrel. The severe weather has led to production disruptions in major US crude-producing regions, with around 250,000 barrels per day of crude production lost.
The US energy sector is feeling the strain, with crude oil and natural gas production falling sharply due to freezing temperatures. Analysts estimate a total loss of around 300,000 barrels per day in US crude output, with North Dakota reporting a reduction of up to 110,000 bpd and the Permian Basin potentially seeing a drop of 200,000 bpd.
The harsh weather has also impacted refining operations, with major fuel delivery hubs expecting disruptions. The Colonial Pipeline, the largest US fuel conduit, is bracing for ice and snow, potentially affecting gasoline demand.
The Energy Information Administration (EIA) forecasts that global oil production will exceed demand in 2026, causing oil inventories to rise and prices to decline. The EIA predicts Brent crude oil prices will average $56 per barrel in 2026, down from $69 per barrel in 2025.
Despite the current disruptions, global oil production is expected to increase by 1.4 million barrels per day in 2026, driven by OPEC+ production growth. However, production growth is expected to slow in 2027.
The US shale industry is expected to remain resilient, with production proving robust despite lower oil prices. The Permian Basin is projected to account for over 50% of total onshore US oil output in 2026.
The oil market is expected to rebalance later in 2026 and into 2027, with Goldman Sachs predicting a supply wave exceeding demand by 3.84 million barrels per day in 2026. However, disruptions from Russia, Venezuela, and Iran pose risks to watch.
Overall, oil prices are expected to remain volatile, influenced by geopolitical developments and weather-related disruptions.
