NUSADAILY.COM – NEW YORK – Oil prices jumped nearly four percent in late trading Monday (Tuesday morning GMT), driven by a slow forecast recovery in U.S. crude production after last week’s freezing weather in Texas halted production in the United States’ largest energy-producing state.
Brent crude futures for April delivery settled at $65.24 a barrel, adding $2.33, or 3.7 percent, on the London ICE Futures Exchange.
U.S. West Texas Intermediate (WTI) crude futures for March delivery jumped $2.25, or 3.8 percent, to close at $61.49 a barrel on the New York Mercantile Exchange.
The benchmark U.S. crude contract for March delivery expired on Monday (22/2/2021), and the more traded April contract rose 2.44 U.S. dollars, or 4.1 percent, to 61.70 U.S. dollars per barrel.
U.S. producers are closing oil production by between two million and four million barrels per day due to cold weather in Texas and other oil-producing states. As well as unusual cold conditions can damage installations that can keep production from operating longer than expected.
Shale oil producers in the region could take at least two weeks to fully restart normal production, multiple sources said. Because damage assessments and electrical disturbances slowed their recovery.
“Significant losses from crude oil and gasoline production showed more increases. The new highest probability could be within a week,” said Jim Ritterbusch of consultancy Ritterbusch and Associates.
But he cautioned that with limited refining capacity. Prices can come under pressure if distilleries take weeks to return to normal.
Crude Oil Prices
Crack spread (the difference between the price of crude oil and oil products that are extracted), the distillery margin indicator has dropped 5.0 percent.
For the first time since Nov. U.S. drilling companies are slashing the number of oil rigs in operation. As cold weather and snow blanketed Texas, New Mexico, and other energy-producing centers. Indicates tighter supply in the future.
OPEC+ oil producers will meet on March 4. Sources said the group would likely ease supply restrictions after April given the price recovery. Although any increase in production is likely to be moderate given the lingering uncertainty over the pandemic.
“Saudi Arabia is eager to pursue higher prices to cover the social break-even cost of about 80 U.S. dollars per barrel. While Russia is very focused on reducing current cuts and returning to normal production,” seb chief commodity analyst Bjarne Schieldrop said. (ros)