Oil Price Forecast: WTI $61.71 And Brent $66.67 As Big Freeze Slams Supply

Global Oil And Distillate Setup For WTI CL=F And Brent BZ=F

Headline Price Levels And Market Context

Front-month WTI (CL=F) trades around $61.71, up $1.08 on the session, a 1.78% move that lifts crude off its recent lows but keeps it firmly in a mid-$60s ceiling environment. Brent (BZ=F) changes hands near $66.67, also higher by $1.08 or 1.65%, leaving the Brent–WTI spread in a modest $5 range that still supports Atlantic Basin exports without signaling extreme tightness. Regional marker Murban trades around $65.88, up $0.80 or 1.23%, while Louisiana Light is near $61.92, higher by $1.45 or 2.40%, confirming that the U.S. Gulf Coast complex is repricing weather and outages but not yet pricing in a structural shortage. At the heavier and sweeter ends of the barrel, Bonny Light sits close to $78.62, down $2.30 or 2.84%, and Mars US is near $69.79, off $0.88 or 1.25%, showing that medium-sour benchmarks tied to offshore Gulf of Mexico flows are not screaming crisis despite the freeze and logistics noise. The OPEC Basket around $63.69 (up $0.77, 1.22%) and gasoline futures near $1.834 per gallon (up 0.77%) complete a curve that is nudging higher across the board, but still far from panic levels. The market is repricing a short, sharp supply shock and renewed geopolitical risk, not a 2008-style super-spike.

Heating Oil And ULSD: Weather Premium Versus Refinery Risk

NY Harbor ULSD March futures – the benchmark for U.S. heating oil and a large share of diesel – slipped 0.9%, settling at $2.3283 per gallon, down 2.06 cents after a steep cold-weather rally. That pullback is pure positioning: traders are taking profits after a surge driven by winter storms that simultaneously hit demand for heating and disrupted supply chains. The level above $2.30 still embeds a solid winter premium, especially with refinery issues unresolved. Distillate contracts can quickly decouple from crude when weather, logistics and refining converge, and that is exactly the setup now. Heating oil normally tracks WTI (CL=F) and Brent (BZ=F), but when refinery outages collide with a cold snap, ULSD can squeeze sharply, driving cracks and front spreads higher even if flat crude is relatively calm. Right now, the futures curve is in a “squeeze-risk but not meltdown” configuration: the first wave of weather fear is fading, but any additional outage headline can send ULSD straight back up.

U.S. Supply Shock From The Big Freeze And The Speed Of Recovery

The recent Arctic blast cut U.S. crude output by up to 2 million barrels per day over the weekend, with the Permian Basin taking the largest hit as wells, gathering systems and surface equipment froze or were shut in. This is a meaningful temporary loss in a market where total U.S. production normally anchors global growth. On the refining side, Exxon Mobil (NYSE:XOM) suspended units at its Baytown, Texas complex, and Cenovus Energy (NYSE:CVE) is wrestling with mechanical problems at its Lima, Ohio refinery that could delay a full restart. Those two sites alone are significant for gasoline, diesel and heating oil supply into key U.S. regions. At the same time, recovery is already underway. Shut-ins are easing, with external consultancy estimates pointing to full production coming back by around 30 January, which effectively caps the duration of the supply shock at days, not months. That is why WTI (CL=F) is trading around $61–$62, not above $70. The market is pricing a hit to January and early February physical flows, but it sees no evidence yet that the freeze has damaged long-term capacity. The result is a “holding pattern”: enough disruption to justify a bounce in crude and distillates, not enough to support a sustained spike without additional catalysts.

International Crudes: Azeri Light, Mars US And Global Differentials

Outside North America, differentials underline a market that is tight in pockets but not stressed globally. Azeri Light has slipped to about $67.86 per barrel, down $0.48 or 0.70%, after a prior print around $66.63 earlier in the week. The medium-term context matters: this grade printed a record low of $15.81 per barrel in April 2020 and a record high of $149.66 in July 2008. At $67–$68, Azeri Light is trading in the mid-range of the last two decades, signalling that Mediterranean and European refiners are not bidding barrels at any price despite stricter sanctions on Russia and ongoing shipping constraints. The spread between Azeri Light and Brent (BZ=F) near $66.67 is narrow, telling you that quality premia are modest and refiners still have enough flexibility between Caspian, North Sea and Middle Eastern barrels. In the U.S., Mars US near $69.79 – a medium-sour Gulf of Mexico benchmark – sits only a few dollars above WTI (CL=F), showing that sanctions and shipping insurance pressure on Russia’s shadow fleet, while real, have not yet translated into blow-out premiums for comparable sour barrels. This structure confirms the same message from the flat price: the system is resilient, but any additional disruption – whether from Russia, Venezuela, or the Middle East – can move these differentials fast.

Natural Gas Volatility And Cross-Commodity Flows

The U.S. natural gas curve has whipsawed around the same weather story but with much more violence. Front-month gas surged above $6 for the first time since 2022 and then retreated to about $5.945, down $0.855 or 12.57% on the day. That is a 117% rally off the lows followed by a double-digit pullback as traders reassess how long the freeze will last and how quickly production and pipelines normalise. Gas volatility matters for oil because fuel-switching, power demand and hedging flows link the two complexes. When gas spikes, industrial users and power plants lean harder on liquids where they can, supporting demand for WTI (CL=F) and condensate. When gas retraces sharply, the marginal bid for oil from switching fades. Current levels show a gas market that is stressed but not broken and a crude market that is feeding off the same weather cycle but expressing it in a more measured way. The gas reversal is a warning: if the weather normalises faster than expected, some of the weather premium in CL=F, BZ=F and distillates can bleed off quickly.

Geopolitics: Iran, Russia Sanctions, Venezuela And Shipping Risk

Beyond weather, the political tape is rebuilding a risk premium into oil. Washington’s harder line on Iran, including a visible naval posture and talk of an “armada” presence, raises the probability of future disruption in Gulf and Red Sea flows even if nothing breaks immediately. The EU is preparing fresh sanctions aimed at Russia’s shadow fleet and broader energy trade, tightening the screws on discounted Russian barrels that have been flowing to Asia and, indirectly, reshaping Atlantic Basin balances. This comes on top of existing pressure that already created periods where Russian crude and fuel oil into Asia were constrained by insurance, freight and payment frictions. At the same time, the U.S. has reopened, and then recalibrated, its stance on Venezuelan crude, establishing mechanisms to control that revenue stream and keeping effective leverage over heavy barrels that would otherwise ease global heavy-sour tightness. India is diversifying away from Russian volumes by cutting separate deals with Middle Eastern and Atlantic suppliers, including Petrobras and others, which shifts trade flows but does not fully neutralise the risk of a harder Western stance later. The net result is a complex but clear backdrop: every new sanctions package or naval move raises the floor under Brent (BZ=F) and WTI (CL=F) even when spot physical balances still look manageable.

Structural Moves: ExxonMobil CCS, Gulf Coast Infrastructure And Long-Term Supply

On the structural side, ExxonMobil (NYSE:XOM) is doubling down on carbon capture and storage (CCS) along the U.S. Gulf Coast, scaling from contracts into actual operations. Its Low Carbon Solutions unit has started transporting and storing up to 2 million metric tons per year of CO₂ from CF Industries’ Donaldsonville complex and has added customers like AtmosClear and Lake Charles Methanol II, taking total contracted volumes to around 9 million tons per year across six customers. This portfolio extends into steel, ammonia, natural gas processing, industrial gases, power generation and methanol – precisely the sectors that are hard to decarbonise and deeply tied to hydrocarbon demand. Several more projects are scheduled to move into operations in 2026, including CO₂ capture at the NG3 gas processing facility in Louisiana and CCS tie-ups with partners such as Linde and Nucor. Exxon is also working toward a final investment decision on a Low Carbon Data Center concept pairing gas-fired generation with CCS to power AI-heavy data loads with lower emissions intensity. For oil price, this matters in two ways. First, CCS investments protect the social and regulatory licence of high-emission industrial clusters that are large consumers of oil and gas, reducing the probability of forced demand destruction. Second, anchoring CCS in the Gulf Coast deepens the region’s role as a long-term hub for hydrocarbons and low-carbon energy, reinforcing the strategic importance of grades like WTI (CL=F) and regional blends in any realistic transition path.

Technical Zones For WTI CL=F And Brent BZ=F

Technically, WTI (CL=F) around $61.71 sits in a congestion band where prior support and resistance have flipped multiple times. The move higher of $1.08 on the day shows fresh buying interest, but the price remains well below the recent highs in the low- to mid-70s and far below the $100+ peaks seen in prior geopolitical flare-ups. For the current setup, $60 is the key nearby line: a sustained break below invites a slide toward the high-50s as the weather premium unwinds, while repeated bounces above $60 confirm that the market is willing to defend this zone on any news about production, inventories or sanctions. For Brent (BZ=F), $66.67 keeps the benchmark in a narrow range where $65 acts as immediate support and the low-70s as the first ceiling. The roughly $5 Brent–WTI spread is wide enough to justify exports but not wide enough to signal acute tightness in non-U.S. supply. On the refined side, ULSD at $2.3283 per gallon is the chart to watch: hold this area and any new refining outage or weather twist can relaunch a squeeze; lose it with smooth refinery restarts and warmer forecasts and the curve can flatten quickly. Azeri Light around $67.86 underscores the same message: mid-range pricing with clear room to the upside if a geopolitical shock hits, and room to the downside if weather and sanctions risks de-escalate.

Positioning View: Bullish Or Bearish On Oil Price From Here

After combining weather, outages, geopolitics, differentials and structural moves, the picture for oil price is skewed moderately bullish, not euphoric. Short term, the big freeze is a classic transient supply shock: up to 2 million bpd of U.S. production offline, refinery units at Baytown and Lima disrupted, and heating oil contracts that already overshot and are now retracing. As production returns by the end of January and refineries restart, that specific premium can fade, especially if natural gas stays below the recent $6 spike. At the same time, the floor under WTI (CL=F) and Brent (BZ=F) is hardening. EU work on new Russia sanctions, the constant Iran risk, managed flows from Venezuela, and India and China rebalancing their import mixes all reduce confidence in cheap, frictionless supply. Structural demand from hard-to-abate industry and new categories like low-carbon data centers, backed by investments such as ExxonMobil’s Gulf Coast CCS portfolio, make it unrealistic to price in aggressive long-term demand collapse. In that environment, WTI (CL=F) in the high-50s to low-60s and Brent (BZ=F) in the mid-60s look more like a buy-the-dip zone for medium-term traders rather than a level to sell aggressively, while a move into the upper-60s to low-70s for WTI and low- to mid-70s for Brent would be a logical target band if the next catalyst is bullish. On balance, the setup is constructive rather than complacent: not a call for an imminent melt-up, but a clear pro-oil bias as long as WTI holds above $60 and no shock de-rates global demand.

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