Natural gas futures spiked energy prices across the board on Tuesday as large parts of the US struggled with freezing temperatures and ongoing blackouts in several states.
Natural gas futures HOH21 in March,
climbed 5.5% to $ 3,073 per million British thermal units, while March’s gasoline RBH21,
climbed 5.3% to $ 1.7813 per gallon. And March fuel oil RBH21,
was up nearly 3% to $ 1.8235 per gallon.
The price hike came when the Southwest Power Pool, a group of utilities spanning 14 states, ordered utilities to initiate power outages to meet a depleted supply of backup energy. That’s like a winter storm that moved from the Ohio Valley to the Gulf Coast of the US, bringing freezing temperatures as far south as San Antonio, Texas.
Extreme winter weather forced Texas wind power generators offline, causing spikes in electricity prices. The Texas Electric Reliability Council estimated that two million people were without power Monday night, The Wall Street Journal reported. President Joe Biden declared a state of emergency in Texas, at the request of Governor Greg Abbott, paving the way for emergency aid to reach the state. The storm has killed two people in Texas so far.
The rare storm that hit Texas also raised concerns about oil supply disruptions amid reports that some refineries had to shut down due to extreme cold.
The freezer also caused a sharp rise in oil futures prices on Monday. Regular trade was closed due to the holiday on President’s Day.
Raw prices for March CL.1,
climbed 61 cents, or 1%, to $ 60.08 a barrel, after crossing $ 60 a barrel on Monday for the first time since January 2020. Brent crude oil prices BRN00,
won 27 cents to $ 63.47 a barrel, also marking a January 2020 high.
Read: Oil ends Friday’s session higher amid Middle East tensions, with global price up more than 5% over the week
“But because the increase in Texas energy demand and the drop in daily supplies to one million barrels are temporary, levels above $ 60 seem attractive to top sellers,” Ipek Ozkardeskaya, a senior analyst at Swissquote, warned in a note to customers. . “A downward correction could easily occur and push prices below $ 55 a barrel, but it should not hurt the positive trend in oil prices over the medium term.”