Pump jackets will work in the Permian Pool in Midland, Texas, on February 13th.
Photographer: Matthew Busch / Bloomberg
Photographer: Matthew Busch / Bloomberg
Oil held near $ 60 a barrel in Asia as a deeper energy crisis in the U.S. accounted for about a third of the country’s crude production.
New York futures fell lower after a 1% settlement Tuesday from Friday’s close. Freezing temperatures have caused power outages across the central U.S., reducing yields by 3.5 million barrels per day or more, according to traders and industry officials. There has also been more than 3 million barrels per day of refueling capacity, consultant Energy Aspects Ltd. has made an estimate.
See also: U.S. Oil Product Pluges by thirds like Permian Slams Freeze
The crisis in one of the world’s largest oil producers continues to drive up global prices and has boosted fuel, with U.S. gasoline futures jumping nearly 5% on Tuesday. But the loss of demand from troubled finishers has also pushed West Texas Intermediate’s fast-moving timeline back to a bearish contango structure for the first time in about a month.
While it is not clear how long the cold snare will last in the U.S., the impact on global prices may be short-lived. Crude will then revert to trading on fundamentals, with supply control from OPEC + and a gradual improvement in demand as vaccines are distributed that appear to support the market.
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In Russia, meanwhile, freezing temperatures are also contributing to yield cuts. The expected increase in Russia So far oil production in February has not come to fruition, as some areas are blocking pipelines due to bad cold weather.