Weather-based Supply Disruptions Further Lift Crude Prices

By Adedapo Adesanya

Oil prices still traded up on Tuesday supported by disruptions in the United States as cold weather in Texas shut the nation’s largest refineries and shale oil fields, threatening to cut off fuel supplies.

As a result, the international crude benchmark, Brent futures, gained 17 cents or 0.22 per cent to trade at $63.45 per barrel, while the US benchmark, West Texas Intermediate (WTI) crude futures, rose by 13 cents or 0.23 per cent to sell at $60.15 per barrel.

The massive supply disruption came at a time when nationwide crude stockpiles are shrinking at an accelerated pace and the Organisation of the Petroleum Exporting Countries (OPEC) is holding millions of barrels a day off the market.

With the situation, there was a rise in demand for electricity but the weather had disrupted operations of oil refineries and producers in the region, prompting multiple shutdowns in the nation’s key energy hub.

There were estimates that almost four million barrels per day refining capacity along the Texas Gulf Coast was offline with little clarity when operations would resume.

In Russia, freezing temperatures are also contributing to production curtailments. The expected increase in Russia’s February oil output has so far not materialized, as some fields curb pipeline flows due to the abnormally cold weather.

Meanwhile, in Norway, representatives of a trade union and employer organisation reached an agreement early on Tuesday to avert an oil workers’ strike that could have taken one-third of production offline.

The dispute over pay between the Norwegian Oil and Gas Association and trade union SAFE was settled early on Tuesday after a state mediator was called in to help with the talks.

Following the mediated settlement in the talks between the trade union and the employers’ association, the strike is now averted and doesn’t threaten production at some of Norway’s largest oil and gas fields.

Optimism surrounding global economic recovery amid accelerated COVID-19 vaccine rollouts was also attributed for supporting prices on Tuesday.

The World Health Organization (WHO) on Monday listed AstraZeneca and Oxford University’s COVID-19 vaccine for emergency use, widening access to the relatively inexpensive shot in the developing world.