By Peter Nurse
Investing.com -- Oil prices soared on Friday to seven-year highs on worries that a winter storm in the United States will result in severe supply disruptions.
By 9:20 AM ET (1420 GMT), U.S. crude futures traded 1.9% higher at $92.00 a barrel, while the Brent contract rose 1.7% to $92.66. Both benchmarks earlier climbed to their highest levels since October 2014.
U.S. Gasoline RBOB Futures were up 1.1% at $2.6721 a gallon.
A massive winter storm has swept across central and northeast regions of the United States, leaving hundreds of thousands of homes and businesses without power on Friday.
Winter storms in Texas last year badly hit the state’s energy complex, freezing gas field well-heads and taking down power stations and transmission lines. So far, market operator ERCoT hasn’t reported any major disruptions, but the complex will be tested as the extremely cold conditions are likely to result in a surge in demand.
Demand for diesel, heating oil and other products has been running ahead of pre-pandemic levels for months while production has struggled to keep up.
U.S. crude stockpiles fell by 1 million barrels last week, according to data from the U.S. Energy Information Administration, against expectations for an increase, while distillate inventories also dropped.
Crude markets have also gained support from tensions surrounding the Ukraine crisis, with the U.S. stating late Thursday that its intelligence agencies believe Russia has formed a plan to fabricate a pretext for an invasion of Ukraine.
Russia is the main supplier of gas to the European market, and an invasion would likely result in the West leveling sanctions on Moscow, potentially resulting in additional demand for crude.
This Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, agreed on Wednesday to lift output by 400,000 barrels a day in March, sticking with its policy of cautiously restoring the supply that was shuttered at the height of the pandemic despite the surge in demand.
Finally, the U.S. labor market defied fears of a Covid-driven slowdown in January, adding 467,000 nonfarm jobs in the month, suggesting that despite the Omicron wave economic activity remains strong in the largest energy consumer in the world.