SINGAPORE (ICIS)--Oil prices rose by more than $1/bbl on Thursday, with Brent on its fifth day of gains, as severe cold conditions in Texas and surrounding regions in the US led to refinery shutdowns and production cuts.
At 03:30 GMT, Brent crude was trading at $65.18/bbl, off the intra-day high of $65.52/bbl, while WTI crude was at $61.80/bbl.
"It has become clearer that the impact from this cold weather has been much more severe than the market was initially expecting," Dutch bank ING said in a note.
"While the colder weather should be behind us by the end of this week, there is the risk that it takes several days for operations to return to normal after the big freeze," it said.
The severe weather has caused several Texas refineries to shut down or reduce operations, with more than 2m bbl/day confirmed to be shutting down entirely.
The production loss is significant and could last for several days if not weeks, the analysts said.
“The cold snap in Texas is currently the main driver for sending oil prices higher, with estimates suggesting some 4m bbl/day of production lost in this period – one-third of US total production,” Singapore-based OCBC Treasury Research said in a note on Thursday.
Louisiana governor John Edwards in a letter to US President Joe Biden late on Wednesday requested a presidential emergency declaration as the severe winter weather continues to impact the state, leaving three people dead, “with more impacts likely over the next two days”.
As of 17 February, 62,000 Louisiana households still did not have power, he said in the letter.
Focus article by Nurluqman Suratman
Additional reporting by Pearl Bantillo
Photo: Power delivery continues to be a problem with extremely high demands as snow and freezing precipitation covered North Texas with another unseasonably cold day and overnight temperatures at -10 degrees Celsius in Fort Worth, Texas, USA on Wednesday, 17 February 2021. (By Ralph Lauer/ZUMA Wire/Shutterstock)