Oil retreats on rising U.S. dollar, though Texas supply choked

By Sonali Paul
MELBOURNE, Feb 17 (Reuters) - Oil prices fell in early trade
on Wednesday as the U.S. dollar climbed, retreating after a
two-day rally that was driven by an Arctic blast curbing output
from oil and gas fields in Texas, the country's biggest
oil-producing state.
U.S. West Texas Intermediate (WTI) crude CLc1 futures gave
up 33 cents, or 0.6% to $59.72 a barrel at 0140 GMT, retreating
from a 13-month high of A$60.95 hit on Tuesday.
Brent crude LCOc1 futures dropped 40 cents, or 0.6%, to
$62.95 a barrel, coming off three days of gains.
"Oil is trading lower via a stronger U.S. dollar which is
gaining a head of steam with U.S. (treasury) yields ripping
higher," Axi chief market strategist Stephen Innes said in a
note.
A stronger U.S. dollar makes U.S.-dollar priced crude more
costly for buyers holding other currencies.
Brent also dropped after Norway, western Europe's largest
oil and gas producer, averted a strike and shutdowns of major
offshore fields, as oil workers reached a wage bargain with
operator Equinor EQNR.OL . Investors had priced in a strike going ahead, as that has
typically happened in the past few years, Rystad Energy analyst
Paola Rodriguez-Masiu said.
"Yet the strike was avoided ...As a result, with oil supply
unaffected, Brent gains had to be reversed to a certain extent,"
she said in a note.
Still, U.S. oil supply remains strained amid a deep freeze
in the U.S. South which has hit power supply, and in turn
knocked out about 500,000 to 1.2 million barrels per day (bpd)
of crude production in the Permian Basin in Texas. Estimates of total curtailed shale oil production range from
at least 2 million barrels per day to 3.5 million bpd, analysts
said.
At the same time, the historic icy snap has knocked out
nearly one-fifth of the country's refining capacity, according
to Reuters calculations.
"This is one of the worst Mother Nature catastrophes I can
ever remember while catching the oil complex wrong-footed at the
supply levels," Innes said.
U.S. oil inventory data from the American Petroleum
Institute industry group and the Energy Information
Administration (EIA) will be released on Wednesday and Thursday
respectively, delayed following a U.S. holiday on Monday.
Analysts polled by Reuters estimated, on average, that crude
stocks fell 2.2 million barrels in the week to Feb. 12.