(Investing) – NEW YORK- Oil prices rose to their highest since late September on Wednesday after a winter storm disrupted U.S. crude production while a weak U.S. dollar and continued Kazakh outages lent further support.
Brent crude futures were up 43 cents, or 0.64%, to $68 a barrel at 11:40 a.m. ET (1640 GMT). U.S. West Texas Intermediate crude was up 53 cents, or 0.85%, at $62.92.
Both grades were headed for their biggest monthly rises in percentage terms since July 2023, with Brent set to rise around 12% and WTI around 10%.
Both benchmarks had climbed about 3% on Tuesday.
On the supply side, a winter storm has been sweeping across much of the U.S., straining energy infrastructure and power grids. Over the weekend, exports of crude oil from U.S. Gulf Coast ports tumbled to zero before rebounding on Monday, ship-tracking service Vortexa said.
Oil prices were also supported by a surprise storage draw.
The U.S. Energy Information Administration said on Wednesday the country’s crude oil inventories fell by 2.3 million barrels to 423.8 million barrels in the week ended January 23, compared with analysts’ expectations in a Reuters poll for a 1.8 million-barrel rise.
“The story of this report is solid demand,” said Phil Flynn, senior analyst at Price Futures Group. “We can see the beginning of the impact of the cold weather and we will see more of that in next week’s report with distillate inventories and decline in production,” he added.
A weak U.S. dollar kept the prices elevated. The greenback is hovering near four-year lows against a basket of other currencies, making dollar-denominated commodities such as oil cheaper for those holding other currencies. The U.S. Federal Reserve is expected to hold interest rates steady in a decision later on Wednesday.
KAZAKH OUTPUT IS GRADUALLY RESUMING
Lost production in Kazakhstan is also underpinning the price rally, though the OPEC+ member hopes that output at the Tengiz field might resume gradually within a week. Sources, however, have said this might take longer.
Meanwhile, pipeline operator CPC, which handles about 80% of Kazakhstan’s oil exports, has restored full loading capacity at its Black Sea terminal after maintenance at a mooring point hit by drones, sources said.
On the supply side, the OPEC+ group comprising the Organization of the Petroleum Exporting Countries, Russia and other allies is set to keep its pause on oil output increases for March at a meeting on February 1, OPEC+ delegates said.
Elsewhere, U.S. officials are working to issue a general licence that would lift some sanctions on Venezuela’s energy sector, sources said, which could weigh on prices.
A U.S. aircraft carrier and supporting warships have arrived in the Middle East, U.S. officials told Reuters, adding to President Donald Trump’s capabilities to potentially take military action against Iran, which has increased concerns of supply disruptions from OPEC’s fourth-biggest crude producer.
Trump urged Iran to come to the table and make a deal on nuclear weapons or the next U.S. attack would be far worse.
Additionally, trilateral negotiations between Russia, Ukraine and the U.S. are set to resume in Abu Dhabi on February 1, Russia’s Interfax news agency cited the Kremlin as saying.
