Natural gas futures were leading a surge in energy prices across the board Tuesday as large swaths of the US struggled with freezing temperatures and blackouts hit multiple states.
Natural Gas Futures for March HOH21,
rose 5.5% to $ 3,073 per million British thermal units, while March petrol RBH21,
it was up 5.3% at $ 1.7813 a gallon. And March RBH21 heating oil,
it was up nearly 3% to $ 1.8235 a gallon.
The price spike came when Southwest Power Pool, a utility group that covers 14 states, ordered utilities to begin blackouts to cope with a depleted supply of standby power. That happened when a winter storm swept from the Ohio Valley to the US Gulf Coast, bringing subzero temperatures to San Antonio, Texas.
Extreme winter weather was forcing wind power generators in Texas to go offline and 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 so far in Texas.
The rare storm that hit Texas also raised concerns about oil supply disruptions amid reports that some refineries closed due to extreme cold.
The freeze also triggered a sharp rise in oil futures prices on Monday. Regular commerce was closed due to the Presidents’ Day holiday.
Crude prices for March CL.1,
it was up 61 cents, or 1%, to $ 60.08 a barrel, after surpassing $ 60 a barrel for the first time since January 2020 on Monday. Brent BRN00 crude prices,
it gained 27 cents to $ 63.47 a barrel, also marking a January 2020 high.
Read: Oil ends Friday’s session higher due to tensions in the Middle East, with global prices above 5% during the week
“But because the Texas surge in energy demand and the drop of up to a million barrels in daily supply are temporary, levels above $ 60 seem attractive to top sellers,” said Ipek Ozkardeskaya, senior analyst. from Swissquote, in a note to customers. . “A downward correction could easily come in and push prices below $ 55 a barrel, but it shouldn’t hurt the positive medium-term trend in oil prices.”