Oil prices climbed today, extending sharp gains in the previous session as frigid weather swept across large swathes of the US, threatening to further disrupt oil supplies.
Brent crude rose 42 cents, or 0.5%, to $91.53 a barrel this morning after rising $1.16 yesterday.
US West Texas Intermediate crude rose 52 cents, or 0.6%, to $90.79 a barrel, having gained $2.01 the previous day to settle above $90 for the first time since October 6, 2014.
Both benchmarks are headed for their seventh weekly gain in a row.
"WTI crude surged over the $90 level after an Arctic blast made its way to Texas and disrupted some oil production in the Permian Basin," said Edward Moya, market analyst at OANDA.
A massive winter storm swept across the central and northeast US yesterday where it was delivering heavy snow and ice, making travel treacherous if not impossible, knocking out power to thousands and closing schools in several states.
Tight oil supplies pushed the six-month market structure for WTI into steep backwardation of $8.08 a barrel today, seven cents shy of an eight-year high of $8.15 on November 29.
Backwardation occurs when prices for prompt spot trade are at a premium to future prices, and usually encourages traders to take oil out of storage.
As recovering demand is outpacing supply, oil markets are increasingly vulnerable to supply interruptions, analysts said.
"Even as thousands of flights are cancelled, the energy market is fixated over production and not so much short-term demand shocks," said Moya.
Geopolitical tensions in Eastern Europe and the Middle East have also fuelled oil's sharp gains which have pushed Brent and WTI futures up by about 18% and 21%, respectively, so far this year.
The US warned that Russia was planning to use a staged attack as justification for invading Ukraine. Russia's President Vladimir Putin has blamed NATO and the West for increased tensions, even as he has moved thousands of troops near to Ukraine's border.
"With geopolitical risk in Ukraine and only gradual increase of production by OPEC+, prices are expected to head toward $100 a barrel," Chiyoki Chen, chief analyst at Sunward Trading said.
The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, agreed earlier this week to stick to moderate rises of 400,000 barrels per day (bpd) in oil output with the group already struggling to meet existing targets and despite pressure from top consumers to raise production more quickly.
Over the medium term, however, some analysts expect the oil market to flip into surplus as soon as next quarter, helping put the brakes on the recent surge in prices.