Market Moves: By mid-morning trading, Brent crude was modestly lower but remained elevated near multi-month highs, with U.S. West Texas Intermediate (WTI) following a similar pattern. Both benchmarks had surged roughly 3 per cent in the prior session as traders weighed tightening physical supplies and broader macro forces.
Storm Halts U.S. Output and Exports
A powerful winter system that swept across key U.S. producing regions over the weekend forced significant shut-ins, with total crude output losses estimated at up to 2 million barrels per day — nearly 15 per cent of national production. Exports of crude and liquefied natural gas from Gulf Coast ports fell to zero before a partial rebound, highlighting the severity of weather-related disruptions to logistics and refining operations.
Kazakhstan’s Slow Recovery Adds Pressure
Oil markets have also been supported by supply constraints in Kazakhstan, where the Tengiz oilfield — one of the country’s largest — continues to recover only gradually from a fire and power outage that forced extended shutdowns. Analysts now expect output to remain well below normal levels into early February, tightening the global supply backdrop even as the key Caspian Pipeline Consortium resumed full loading capacity at its Black Sea terminal.
OPEC+ Policy and Geopolitical Risks
Traders’ attention is also turning to an upcoming February 1 meeting of the OPEC+ alliance, where delegates are widely expected to maintain the group’s current pause on production increases for March, a policy aimed at balancing market conditions amid soft demand forecasts. The Organisation of the Petroleum Exporting Countries and its allies have already frozen output hikes through the first quarter to support prices.
Meanwhile, geopolitical tensions have flared in the Middle East, with a U.S. aircraft carrier strike group deployed to the region. While officials say the move strengthens defensive capabilities, markets are sensitive to any escalation that could threaten supplies from major producers.
Demand Signals and Inventories
On the demand side, a Reuters poll suggests U.S. crude and gasoline stockpiles likely rose in the week to January 23, while distillate inventories — key for heating fuel amid cold weather — were expected to decline. Official government data is due later in the day, and traders will be watching for any signs of an emerging deficit or surplus.