Oil prices gain on U.S. supply disruptions and weaker dollar

Oil prices climbed in Asian trading on Wednesday, extending the previous session’s gains after severe cold weather disrupted U.S. production, signaling tighter supply conditions.

Crude was also supported by a weaker dollar, which slid to near a four-year low this week, while markets continued to monitor heightened tensions between the United States and Iran following comments from President Donald Trump that a second armada was heading to the Middle East.

Brent futures for March edged up 0.1% to $67.66 a barrel, hovering near a four-month high, while U.S. West Texas Intermediate futures rose 0.2% to $62.53 a barrel by 20:49 ET (01:49 GMT).

Oil prices jump as U.S. snowstorm disrupts supply

Oil’s advance this week was largely fueled by a powerful winter storm sweeping across the United States, which disrupted crude output in several producing regions.

Exports from the U.S. Gulf Coast were also brought to a standstill, as heavy snowfall and sub-zero temperatures blanketed large parts of the country. According to Reuters estimates, roughly 2 million barrels per day of production were affected over the weekend.

These supply interruptions have prompted traders to brace for sharp drawdowns in U.S. crude inventories in the weeks ahead, signaling tighter supply conditions in the world’s largest oil-consuming market.

API data points to declining U.S. inventories

Figures from the American Petroleum Institute released late Tuesday showed an unexpected decline in U.S. crude inventories last week. Stockpiles fell by roughly 250,000 barrels, according to the API, defying expectations for a 1.45 million-barrel build.

The API report often foreshadows a similar trend in the official inventory data, which is scheduled for release later on Wednesday.

Oil gains on softer dollar ahead of Fed rate call

A weaker dollar also lent support to oil prices, as declines in the greenback tend to boost demand for commodities priced in the U.S. currency.

The dollar index fell to near a four-year low on Tuesday, weighed down by investor concerns over U.S. economic uncertainty, the impending Federal Reserve interest rate decision, and intermittent trade and geopolitical policy moves under President Donald Trump.

The Fed is broadly expected to keep interest rates unchanged at the end of its meeting later in the day, with markets focused on signals from Chair Jerome Powell regarding the policy outlook for the year ahead.

Sources: Investing