OIL FUTURES: WTI tops $90/b as winter weather affects Permian output

US crude prices topped $90/b for the first time since 2014 as a weaker dollar and reports of weather-related Permian shut ins sent oil higher for a fifth straight session.

NYMEX March WTI settled $2.01 higher at $90.27/b and ICE April Brent climbed $1.64 to $91.11/b.

Oil prices pushed to fresh highs on the heels of media reports that some Permian basin producers had shut in production Feb. 3 because of freezing temperatures and ice disrupting trucking operations.

"WTI crude surged over the $90[/b] level after an arctic blast made its way to Texas and disrupted some oil production in the Permian Basin," OANDA senior market analyst Ed Moya said in a note. "The oil market is too tight and vulnerable to any shock. Even as thousands of flights are canceled, the energy market is fixated [on] production and not so much short-term demand shocks.

Winter weather has already contributed to lower US crude production, with the US Energy Information Administration reporting total output at a 10-week-low 11.5 million b/d during the week ended Jan. 28.

NYMEX March ULSD rallied 7.06 cents to $2.8395/gal and March RBOB moved 3.57 cents higher to $2.6427/gal.

A weaker US dollar added further support to oil prices, analysts said. ICE US dollar Index futures was holding at around 95.35 near the close of oil trading, down 0.6 percentage point from the session prior and on pace for the lowest close since Jan. 17.

Front-month WTI last settled higher Oct. 6, 2014, while ICE Brent was last higher on Oct. 8, 2014.

The WTI rally was realized mostly at the front end of the curve, opening the backwardation to the year-ahead contract to $11.86/b, up 81 cents from the session prior and the widest since September 2013.

OPEC and its allies reaffirmed Feb. 2 that they would not provide additional supplies beyond the previously agreed 400,000 b/d monthly, but the inability of several members to meet their lower January quotas suggests the actual market impact of the quota increase will be less than advertised. Against this backdrop, the market appears primed for even modest supply shocks to send prices higher.

"The concern for the market is that whilst the group may announce sizable production increases, in reality, what the market will see is smaller. This has been evident for several months now," ING bank analysts said in a note.