Topline
A key measure of U.S. oil supply was at its lowest level in nearly a year even before winter storms forced some of the largest energy companies to halt operations, a sign that prices could remain high until the crisis passes.
Key Facts
Government data out Thursday showed oil inventories were at the lowest point since March as a wave of wells and refineries began to close because of the back-to-back storms.
The closures at Motiva Enterprises, ExxonMobil, Citgo Petroleum and other energy companies have raised concerns about oil supply, pushing prices to 13-month highs.
Key Background
Crude inventories dropped by 7.3 million barrels in the week ended Feb. 12 to the lowest level since March, 2020, according to the Energy Information Administration data. The decline was nearly three times the size of what analysts had expected. Prices of the U.S. oil benchmark West Texas Intermediate held near $61 per barrel Thursday, the highest level since January 2020.
Tangent
The winter storms also froze natural gas pipelines across the country, creating a shortage that left millions without power in the historically low temperatures. Several states have initiated rolling blackouts to deal with overwhelmed power grids. In Texas, Gov. Greg Abbott has temporarily limited sales of natural gas exports outside of the state. Stockpiles fell to 2.281 trillion cubic feet last week, according to the EIA, well below stocks at the same time a year earlier.
Big Number
20-25%. That’s how much of total U.S. gas production that Texas, Oklahoma, Kansas, Louisiana and other parts of the south central U.S. typically account for, according to the Department of Energy.
Crucial Quote
“The situation in Texas has captured the most attention, and while these weather effects are temporary, we expect the market tightness and the dire nature of the situation to continue to keep prices high until blackouts are ended, power lines restored, and production comes back online,” commodity analysts at RBC Capital Markets wrote in a research note this week.
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February 19, 2021 at 01:34AM
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A Key Measure Of Oil Supply Was Already Near 1-Year Low When Storms Froze U.S. Energy Market - Forbes
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