Oil prices rose in Asian trade on Wednesday, extending gains from the prior session after extreme cold weather disrupted production across the U.S., pointing to tighter supplies.
Weakness in the dollar, which slumped to a near four-year low this week, also aided crude prices, while focus remained on tensions between the U.S. and Iran after U.S. President Donald Trump said a second armada was headed to the Middle East.
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Brent oil futures for March rose 0.1% to $67.66 a barrel– a near four-month high– while West Texas Intermediate crude futures rose 0.2% to $62.53 a barrel by 20:49 ET (01:49 GMT).
Oil rallies as US snowstorm batters supply Oil’s gains this week were driven chiefly by a winter storm that swept across the U.S. and was seen disrupting crude production in several parts of the country.
Exports from the U.S. Gulf Coast also slumped to zero as the storm caused heavy snowfall and subzero temperatures across vast swathes of the country.
Reuters estimates showed about 2 million barrels per day of oil over the weekend.
Supply disruptions in the U.S. saw traders positioning for steep drawdowns in U.S. oil inventories in the coming weeks– a trend that heralds tighter supplies in the world’s largest fuel consumer.
US inventories seen shrinking- API Data from the American Petroleum Institute, released on Tuesday evening, showed U.S. oil inventories unexpectedly fell last week.
Inventories shrank by about 0.25 million barrels, the API data showed, compared to expectations for a build of 1.45 mb.
The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday.
Dollar slide aids crude; Fed rate decision awaited Weakness in the dollar also benefited oil markets, given that a drop in the currency pushes up prices of commodities priced in the greenback.
The dollar index slid to a near four-year low on Tuesday, as investors fretted over U.S. economic uncertainty, an upcoming Federal Reserve interest rate decision, and sporadic trade and geopolitical policies under President Donald Trump.
The Fed is widely expected to leave interest rates unchanged at the conclusion of a meeting later in the day, with focus squarely on what Chair Jerome Powell will signal for policy this year.
