Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oil to increase by 1.8 cents a litre.
*Diesel and
Gasoline both to increase by 2.1 cents a litre.
Market highlights
Texas freeze drives
up prices
US refineries in
Texas have been taken offline by extreme cold and electrical failures after a
deep freeze struck the refining state over the past few days with temperatures
in the single digits Fahrenheit.
Temperatures were recorded as low as four degrees as the winter cold brought
arctic air over the state, causing power failures that have taken half of the
state’s electricity offline.
Oil
prices gained on the news as refined prices also took a climb as speculators chimed
in on lost refiner capacity that could last until the cold temperatures abate
and electrical repairs are made.
It’s the first time in recent memory that I can remember capacity issues caused
in Texas due to cold weather. Usually it’s all about hurricane damage. Gasoline
price s have risen by 13 cents a US gallon since last Wednesday on the weather
event.
In the meantime, electricity costs in the southwestern US also took
a hit with electricity prices ranging upwards of $9000 a megawatt hour from an
average of $25 a megawatt
hour.
According
to Oilprice.com, a Tesla costs about $900 to charge up under these prices.
Storm hits domestic
production
Connected to the
weather in Texas, the Permian Basin, an oil producing region near the Texas
Oklahoma border also has had production disrupted, removing almost one third of
US daily production out of the markets.
Estimates are almost 3.5 million barrels a day of production has been removed
from the US total domestic production numbers of 10.9 million barrels a day,
causing the rise in oil prices as well. Production is not expected to return to
normal levels until sometime around February 22nd. This could be
around for a bit.
US EIA inventory
data
US refiners continued
to chew into oil reserves last week (before the storm) as crude oil supplies
dropped 6.3 million barrels.
Gasoline stocks increased 4.3 million barrels, while distillates dropped 1.7
million barrels.
Refineries operated at 83 percent capacity, just seven points below the normal
before Covid hit last year, indicating higher demand.
US domestic production was reported at 10.9 million barrels a day (pre-storm).
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
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