Crude prices extended their 13-month highs on Wednesday as freezing weather in the US had a severe impact on the country’s oil industry, wiping out a record one-third of the national output and causing refinery shutdowns.
International benchmark Brent briefly traded above $64 per barrel for the first time since January 2020, and was still up around one percent as of 10:42 GMT. US West Texas Intermediate (WTI) crude also reached its highest level since the start of the pandemic on Wednesday, to trade at $60.61 per barrel.
The latest rally came as cold weather slammed some regions in the US, including the country’s key oil producing states such as Texas. Production in the state’s Permian Basin slumped by 65 percent, while total US oil production may have plunged by a record 3.5 million barrels a day as freezing temperatures disrupted oil wells and pipelines’ operations, according to Bloomberg. Before the disastrous winter storm, which also left millions without power, the US was pumping about 11 million barrels a day.
The extreme weather previously forced refineries, including the nation’s largest, to shut down. This included the closure of Motiva Enterprises’ facility at Port Arthur, as well as refineries owned by Exxon Mobil and Total, among others. The US’ refining capacity potentially dropped by around four million barrels, or over 20 percent, in the wake of the cold snap, Reuters reported, citing Marc Amons, senior research analyst with Wood Mackenzie.
“Disruptions to refining operations could be prolonged if the cold damages any equipment or if the power outages affecting Texas are not resolved quickly,” consultant Energy Aspects warned, as cited by Bloomberg.
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