Oil hits 13-month high ahead of US inventories data

Oil prices rose on Monday, extending gains for the second straight day, and jumped to a 13-month high, on estimates of supply shortages during the first quarter of 2021, while fears over the US inventories build up eased after the cold weather conditions receded and refineries in Texas resumed production, which comes ahead of the American Petroleum Institute's preliminary data on the US crude inventories.

US crude rose 1.3% to the highest level since January 2020 at $62.97 a barrel, after opening at $62.15, and hit a low of $61.55, and Brent crude rose 1.4% to the highest since January 2020 at $66.76 a barrel, after opening at $65.81, and hit a low of $65.36.

US crude rose 5.5% on Friday, while Brent crude futures rose 5%, in their first daily gain in 3 and the largest daily gain since January 5.

Goldman Sachs Group estimated that the oil market would have a deficit during the first quarter of 2021, as the global demand for fuel would recover, in addition to OPEC-Plus supply cuts and Saudi Arabia's 1 million barrels voluntary cut in February and March.

Morgan Stanley also projected that the global oil market suffers from supply shortage of about 2.8 million barrels per day, and raised its forecast for Brent crude during the third quarter to reach $70 a barrel.

The cold weather that hit the central, western and southern regions of the US started to improve, as temperatures started to rise near zero levels, which is currently helping in the re-opening of refineries in Texas.

A deep freeze in the US forced most oil wells and refineries in Texas to suspend production as temperatures plummeted to minus 18 degrees, which has not happened since 1989.

Bearing in mind that Texas produces about 4.6 million barrels per day, with more than 31 refineries, according to US Energy Information Administration's data.

The American Petroleum Institute will release its preliminary data on US crude inventories, and the Energy Information Administration will release its official report on Wednesday.