Oil hits pandemic excessive as winter storm pushes demand and poses manufacturing threat

Cattle shelters from the chilly wind on the aspect of a pump jack array Saturday, Feb. 13, 2021 in Midland, Texas.

Eli Hartman. | Odessa American | AP

Freezing climate in areas throughout the U.S. sparked one other rally in power costs and put West Texas Intermediate crude on tempo to settle above $60 a barrel for the primary time because the early days of the coronavirus pandemic.

WTI crude futures rose 62 cents, or 1%, to $60.09 a barrel Monday. The soar brings WTI crude futures up about 24% thus far in 2021. It touched $60.77 a barrel earlier within the session, its highest stage since January 2020.

Brent crude, the worldwide benchmark, climbed 1.4% to $63.33 after hitting its personal 13-month excessive.

The most recent pop within the power market got here as chilly climate racked parts of the U.S. and fostered demand for energy and gas whereas concurrently threatening to hamstring manufacturing in Texas.

“Winter storm and arctic blast of chilly climate that’s making its method south to Houston might have some extreme impacts on the oil business,” oil analyst Andy Lipow wrote over the weekend.

“Frigid climate implies that many oil wells could also be shut in. Water is produced together with oil, that water can freeze up gear,” he added. “The chilly air impacts oil manufacturing in Canada, North Dakota, Oklahoma, Texas and elsewhere.”

Greater than 150 million Individuals are presently below some class of winter climate advisory, in response to the Nationwide Climate Service. As of early Monday morning, the company was predicting a “main winter storm” to dump heavy snow and important ice from the southern plains and Ohio Valley into the Northeast.

Lipow, president of Texas-based Lipow Oil Associates, added that whereas the winter storm probably is not as extreme because the Class 5 hurricanes the Gulf Coast has come to know, odds are good refineries will gradual operations and put together for outages.

He additionally famous that the storm is partly guilty for a gentle rise in gasoline costs over the past week.

The typical per-gallon value of normal gasoline rose to $2.46 from $2.41, in response to the newest weekly report from the U.S. Vitality Info Administration. Analysts anticipate that the EIA’s subsequent weekly report, due Tuesday, will present that retail gasoline costs climbed additional.

The current rally in crude costs additionally marks an extension of the oil market’s rebound because the coronavirus pandemic gutted demand for petroleum merchandise all through a lot of 2020 and despatched crude costs reeling in April.

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https://www.cnbc.com/2021/02/15/oil-hits-pandemic-high-as-winter-storm-pushes-demand-and-poses-production-risk.html