Oil hits a excessive pandemic as winter storm depresses demand and poses manufacturing danger
Silhouette of pumpjacks from the Permian Basin, taken at dusk north of Midland, Texas, USA, in late 2019.
Richard Eden | via Getty Images
Freezing weather in regions in the U.S. sparked another rally in energy prices, pushing West Texas Intermediate above $ 60 a barrel for the first time since the beginning of the coronavirus pandemic.
WTI crude oil futures rose 67 cents, or 1.1%, to $ 60.14 a barrel at 10:08 a.m. ET Monday morning. The jump brings WTI crude oil futures by 24% in 2021. It hit $ 60.77 a barrel at the start of the session, its highest level since January 2020.
The international benchmark index Brent crude rose 1.3% to $ 63.26 after hitting its own 13-month high.
The recent boom in the energy market was due to the fact that cold weather parts of the US increased demand for electricity and fuel while hampering production in Texas.
“The winter storm and arctic cold-weather blast moving south to Houston could have a serious impact on the oil industry,” oil analyst Andy Lipow wrote over the weekend.
“Cold weather means many oil wells can be shut down. Water is produced along with oil to allow water to freeze equipment,” he added. “The cold air affects oil production in Canada, North Dakota, Oklahoma, Texas and elsewhere.”
According to the National Weather Service, more than 150 million Americans are currently under a category of winter weather advice. Early Monday morning, the agency forecast a “major winter storm” to throw heavy snow and significant ice from the southern plains and the Ohio Valley to the northeast.
Lipow, president of Lipow Oil Associates in Texas, added that the winter storm is unlikely to be as severe as the category 5 hurricanes on the Gulf Coast, but good refineries will slow operations and prepare for outages.
He also noted that the storm was partly responsible for a steady rise in gasoline prices over the past week.
The average price per gallon of regular gasoline rose from $ 2.41 to $ 2.46, according to the latest weekly report from the US Energy Information Administration. Analysts assume that the next weekly report of the EIA on Tuesday will show that gas prices in the retail sector have continued to rise.
The recent rally in crude oil prices also marks an extension of the recovery in the oil market as the coronavirus pandemic eased demand for petroleum products for much of 2020 and rocked crude oil prices in April.
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