Oil prices extended gains in Asian trade on Wednesday, supported by supply disruptions caused by extreme winter weather across the United States and continued weakness in the US dollar, which boosted demand for dollar-denominated commodities.
Brent crude futures for March rose 0.1% to $67.66 a barrel, hovering near a four-month high, while West Texas Intermediate (WTI) crude gained 0.2% to $62.53 a barrel by 20:49 ET (01:49 GMT).
US snowstorm tightens oil supply
Crude prices have rallied this week after a severe winter storm swept through large parts of the United States, disrupting oil production and halting exports from the US Gulf Coast. Heavy snowfall and sub-zero temperatures forced multiple production sites offline, tightening near-term supply.
According to estimates cited by Reuters, around 2 million barrels per day of oil production was affected over the weekend. The disruption has prompted traders to position for sharp drawdowns in US crude inventories in the coming weeks, signalling a tighter supply outlook in the world’s largest fuel-consuming nation.
API data shows surprise inventory draw
Further supporting prices, data released by the American Petroleum Institute (API) showed US crude inventories fell by 0.25 million barrels last week, against market expectations of a 1.45 million-barrel build.
API data often serves as an early indicator for official US inventory figures, which are scheduled to be released later on Wednesday.
Dollar weakness adds to upside
Oil prices also benefited from a sharp decline in the US dollar, which slid to a near four-year low earlier this week. A weaker dollar typically supports crude prices by making commodities cheaper for holders of other currencies.
Investors remained cautious ahead of the US Federal Reserve’s policy decision later in the day. While the Federal Reserve is widely expected to keep interest rates unchanged, markets are closely watching Chair Jerome Powell’s guidance on the outlook for monetary policy amid ongoing economic and geopolitical uncertainty.