Title: Oil hits seven-year highs as U.S. storm heightens supply concerns
Feb 04, 2022 06:35AM ET
Oil prices hit seven-year highs Friday as geopolitical tensions and a winter storm in the United States fueled concerns about supply disruptions.
Brent crude was up $1.32, or 1.5%, at $92.43 a barrel by 1120 GMT, having earlier touched $92.66, the highest since October 2014.
U.S. West Texas Intermediate crude was up $1.45, or 1.6%, at $91.72 a barrel, after also hitting a seven-year high of $91.91.
Both benchmarks were on track for their seventh consecutive weekly increase.
A massive winter storm swept across the central and northeastern regions of the United States on Thursday, keeping thousands of people off power.
Tight oil supplies caused the six-month market structure for WTI to show strong backwardation of $8.40 per barrel on Friday, the strongest since November 2021.
Backwardation occurs when prices of contracts for near-term delivery are higher than those for later months, prompting traders to take oil out of storage to sell immediately.
Oil markets also received support from tensions surrounding the Ukraine crisis, which have heightened concerns about already tight oil supplies.
"The late rally in oil prices was also supported by fresh evidence of OPEC's efforts to increase output," said Stephen Brennock of oil broker PVM.
The Organization of Petroleum Exporting Countries and its allies led by Russia, known collectively as OPEC+, agreed this week to a modest 400,000 barrels per day increase in output, despite the group already struggling to meet existing targets and pressure from key consumers to increase production faster.
Iraq, OPEC's second-largest oil producer, produced well below its OPEC+ quota in January, data from state marketer SOMO showed Thursday.
Commerzbank raised its oil price forecast for the first quarter of 2022 to $90 a barrel, up from $80 previously.