Oil Prices Soar Past $63 as Deep Freeze Disrupts Electricity in Texas Impacting Drilling; State of Emergency in Southern States

Oil prices rose on Tuesday as a cold front shut wells and refineries in Texas, the biggest crude producing state in the United States, the world’s biggest oil producer.

Authorities across the US are on alert as a winter storm which is part of a massive system that brings snow, sleet and freezing rain to the southern plains and was spreading across the Ohio valley and to the Northeast.

The worst U.S. power outages were in Texas, affecting more than 2 million homes and businesses. More than 250,000 people also lost power across parts of Appalachia, and another 200,000 were without electricity following an ice storm in northwest Oregon, according to poweroutage.us, which tracks utility outage reports.

President Joe Biden has approved a state of emergency in Texas where a surge in demand for electricity has led to widespread power cuts. More than 4.3 million homes and businesses were without power.

An Arctic air mass that descended over much of the country pushed temperatures to historic lows on Tuesday, said Meteorologist Lara Pagano of the National Weather Service’s Weather Prediction Center in College Park, Maryland.

In Lincoln, Nebraska, a reading of minus 35 degrees Celsius on Tuesday shattered a record set in 1978 of minus 27 degrees Celsius.

In addition, prices also gained as Yemen’s Iran-aligned Houthi group said it struck airports in Saudi Arabia with drones, raising supply concerns in the world’s biggest oil exporter, and on optimism for a global economic recovery amid accelerated Covid-19 vaccine rollouts.

Brent crude was up 35 cents, or 0.6%, at $63.65 a barrel at 0434 GMT, after rising to its highest since January 2020 in the previous session.

US West Texas Intermediate (WTI) crude futures gained 82 cents, or 1.4%, to $60.29 a barrel. WTI did not settle on Monday because of a US federal holiday. Prices will settle at the close of trading on Tuesday.

“The unexpected US supply disruption provides another short-term price recovery bridge that has likely taken oil prices to a level where markets were eventually heading but just a little bit quicker than expected,” Stephen Innes, chief global markets strategist at Axi said in a note on Tuesday.”

The winter storm in the U.S. that left millions without power in record-breaking cold weather claimed more lives on Tuesday. Three people were found dead after a tornado hit a seaside town in North Carolina while four family members perished in a house fire in Houston while using a fireplace to stay warm.

The storm that overwhelmed power grids and immobilized the region of Southern Plains carried heavy snow and freezing rain into New England and the Deep South and left behind painfully low temperatures. Wind-chill warnings extended from Canada into Mexico.

Utilities from Minnesota to Texas implemented rolling blackouts to ease the burden on power grids straining to meet extreme demand for heat and electricity. The Southwest Power Pool, a group of utilities covering 14 states, said the blackouts were “a last resort to preserve the reliability of the electric system as a whole.”

In all, at least 16 deaths were reported. Other causes included car crashes and carbon monoxide poisoning.  By mid-morning, 3,000 flights had been cancelled across the country.

The weather also threatened to affect the nation’s COVID-19 vaccination effort as already massive power outages across Houston has impacted a facility storing 8,000 doses of Moderna vaccines, as health officials scrambled to find takers. President Joe Biden’s administration though had hinted that delays in vaccine shipments and deliveries were likely.

Texas officials requested 60 generators from the Federal Emergency Management Agency (FEMA) and planned to prioritize hospitals and nursing homes. The state opened 35 shelters to more than 1,000 occupants, the agency said.

Treacherous weather will maintain its grip on many parts of the United States from Tuesday through Friday, with up to 10 cm of snow and freezing rain expected from the Southern Plains into the northeast, forecasters said.


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