Oil extends gains above $90/bbl as winter storm sweeps through United States

SINGAPORE, Feb 4 (Reuters) - Oil prices climbed on Friday, extending sharp gains in the previous session as frigid weather swept across large swathes of the United States, threatening to further disrupt oil supplies.

Brent crude rose 34 cents, or 0.4%, to $91.45 a barrel by 0206 GMT, after rising $1.16 on Thursday.

U.S. West Texas Intermediate crude rose 46 cents, or 0.5%, to $90.73 a barrel, having gained $2.01 cents the previous day to settle above $90 for the first time since Oct. 6, 2014.

Both benchmarks are headed for their seventh straight weekly gain.

"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, senior market analyst at OANDA.

A massive winter storm swept across the central and Northeast United States on Thursday 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. read more

Tight oil supplies pushed the six-month market structure for WTI into steep backwardation of $8.08 a barrel on Friday, 7 cents shy of an eight-year high of $8.15 on Nov. 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 shocks, 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 futures up by 17% and WTI by 20% so far this year.

The United States warned that Russia was planning to use a staged attack as justification for invading Ukraine. read more 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. [nL1N2UD0KX]

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.

"We expect the sequential trend of quarterly global stock draws will flip to inventory builds as soon as 2Q’22, and sustain for the next 15-18 months," analysts at Citi Research said in a note late on Thursday.[nFWN2UE1GX]

"Our view is for a tight crude oil market to shift to surplus outright and in terms of days of demand cover."

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