Silhouette of Permian Basin pump jackets, taken at dusk, north of Midland, Texas, USA in late 2019.
Richard Eden | via Getty Images
Freezing weather in regions in the US sparked a fresh surge in energy prices and triggered West Texas Intermediate crude to rise above $ 60 a barrel for the first time since the early days of the coronavirus pandemic.
WTI crude oil futures rose 67 cents, or 1.1%, to $ 60.14 a barrel Monday morning around 10:08 a.m. ET. The jump has seen WTI crude oil futures up 24% so far in 2021. Earlier in the session, it hit $ 60.77 a barrel, the highest level since January 2020.
Brent oil, the international benchmark, climbed 1.3% to $ 63.26 after hitting its own 13-month high.
The last pop in the energy market came when cold weather conditions plagued parts of the US and boosted demand for power and fuel, while at the same time threatening production in Texas.
“Winter storm and cold polar thrusts heading south to Houston could have serious consequences for the oil industry,” oil analyst Andy Lipow wrote last weekend.
“Cold weather means that many oil wells can be cut off. Water is produced along with oil, which water can freeze equipment,” he added. “The cold air is affecting oil production in Canada, North Dakota, Oklahoma, Texas and elsewhere.”
According to the National Weather Service, more than 150 million Americans currently fall under a category of winter weather advice. As of early Monday morning, the agency forecast a “major winter storm” to dump heavy snow and significant ice from the Southern Plains and Ohio Valley to the Northeast.
Lipow, president of Lipow Oil Associates of Texas, added that while the winter storm is likely not as severe as Category 5 hurricanes have hit the Gulf Coast, there is a good chance that good refiners will be slowing down operations and preparing for failure.
He also noted that the storm is 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 U.S. Energy Information Administration. Analysts expect the next weekly report from the EIA, scheduled for Tuesday, will show that gas prices in the retail market have continued to rise.
The recent rise in crude oil prices also marks an extension of the oil market recovery as the coronavirus pandemic reduced demand for petroleum products for much of 2020 and crude oil prices fell in April.
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