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Oil prices climbed on Wednesday to fresh 13-month highs after U.S. government data showed a drop in crude output after a deep freeze disrupted production last week.

U.S. crude oil production dropped last week by more than 10 per cent, or 1 million barrels per day, during the rare winter storm in Texas, equaling the largest weekly fall ever, the Energy Information Administration said. Refinery crude inputs dropped to the lowest since September 2008 as the freeze knocked out power to millions.

“If you’re getting that kind of drop in one week of EIA production, you’re likely to get more after that,” said Phil Flynn, senior analyst at Price Futures in Chicago.

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“There is some concern that this will be a long-term permanent production drop.”

Traffic at the Houston ship channel was slowly coming back to normal but terminals were still facing several issues. After nearly a quarter of national refining capacity was idled by the freeze, refineries have also started to come back online this week.

Brent crude futures rose $1.67, or 2.6 per cent, to settle at $67.04 a barrel. The global benchmark hit a session high of $67.30 a barrel, its loftiest since Jan. 8, 2020.

U.S. West Texas Intermediate (WTI) crude futures ended $1.55, or 2.5 per cent, higher at $63.22 a barrel, after touching $63.37, also their highest since Jan. 8, 2020.

The rally continued oil’s steady march to levels not seen since prior to the coronavirus pandemic as vaccine distribution increases and on forecasts for renewed demand.

Oil prices have rallied about 30 per cent since the start of the year, boosted as well by ongoing supply cuts by the Organization of the Petroleum Exporting Countries and its allies.

Some investors have piled into $100 U.S. oil options contracts as appetite for commodities as a hedge against inflationary pressure is rising, industry sources said.

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Volumes in bullish call options and call option spreads for U.S. crude for delivery in December 2021 and December 2022 have surged over the past week, dealers said. About 50,000 options traded in December 2022 on the call spread between oil at $99 and $100 a barrel as well as those between $98-$100 and $90-$100 oil, dealers said.

OPEC+ oil producers will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.

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