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Tuesday, February 16, 2021

Price changes for Thursday, February 18th, 2021

 

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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