Natural-gas and gasoline futures soared on Tuesday, as a swath of the U.S. was thrown into subzero temperatures due to a winter storm.
March natural-gas futures climbed over 6% to $3.093 per million British thermal units, while March gasoline prices jumped 4% to $1.767 a gallon. March heating-oil futures shot up nearly 3% to $1.8235 a gallon.
Among the hardest hit spots by the storm, millions of Texans were reportedly without power as that state endured a rare bout of wintry weather, and demand exceeded available supply. The spot price for wholesale electricity on Texas’ power grid surged over 10,000% on Monday, Reuters reported.
The Electric Reliability Council of Texas, which runs the grid, said on Monday that it was contending with frozen wind turbines and limited gas supplies, amid worsening weather conditions.
Meanwhile, the Southwest Power Pool, a group of utilities covering 14 states, urged utilities to start rolling blackouts and consumers to cut back to cope depleted energy supplies. The winter storm swept from the Ohio Valley to the Gulf Coast of the U.S., bringing freezing temperatures as far south as San Antonio, with sleet and snow.
The weather was also causing vaccine-rollout delays, as distribution was upended by shipment delays and closed vaccination centers across the country, according to the New York Times.
Elsewhere, U.S. crude prices were hovering just under $60 a barrel, after hitting that level on Monday amid the storm-related energy crisis. Recovery hopes tied to vaccine rollouts are also supporting a rally that has seen crude climb 22% this month.
That Texas frost has “brought the power supply and production of over a million barrels of crude oil per day to a standstill, but has also hindered the operation of pipelines and other means of transport, as well as refineries on the Texan Gulf Coast with a capacity of over 3.3 million barrels per day,” said Eugen Weinberg, head of commodities trading at Commerzbank, to clients in a note.
“All the same, we do not see WTI prices of $60 per barrel as being sustainable in the medium term. After all, at such prices U.S. oil production is likely to recover much more dynamically than expected and delay the reduction of surplus inventories,” he said.
West Texas Intermediate crude futures for March were last up 0.3% to $59.65, holding around levels not since early January 2020. Brent crude futures for March were hovering $63 a barrel, a price not seen since Jan. 22.
Source: Barrons │ Photo: Barrons.com (A woman walks on an empty street on Feb. 15, 2021 in East Austin, Texas. Winter storm Uri has brought historic cold weather to Texas, causing traffic delays and power outages, and storms have swept across 26 states with a mix of freezing temperatures and precipitation. Getty Images)
