Natural gas futures were causing a rise in energy prices generally this Tuesday, as large strips of the U.S. struggled with sub-zero temperatures and blackouts affected several states.
Future marches on natural gas HOH21,
rose 5.5% to $ 3.073 per million British thermal units, while March RBH21 petrol,
rose 5.3% to $ 1.7813 a gallon. And the March RBH21 diesel,
rose nearly 3% to $ 1.8235 a gallon.
The price hike came as the Southwest Power Pool, a utility group covering 14 states, ordered utilities to start shutting down to deal with depleted reserve power supply. This is how a winter storm swept from the Ohio Valley to the U.S. Gulf Coast, and brought icy temperatures south to San Antonio, Texas.
The extreme winter weather forced wind power generators in Texas offline and led to rises in electricity prices. The Texas Electrical Reliability Council estimated that two million people were without electricity Monday evening, the Wall Street Journal reported. President Joe Biden declared a state of emergency in Texas at the request of Gov. 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 were shutting down due to extreme cold.
The freeze also led to a sharp rise in oil futures prices on Monday. Regular operations were closed due to the Presidents ’Day festivities.
March crude oil prices CL.1,
it rose 61 cents, or 1 percent, to $ 60.08 a barrel, after hitting $ 60 a barrel for the first time since January 2020 on Monday. Brent BRN00 crude oil prices,
gained 27 cents to $ 63.47 a barrel, also hitting a January 2020 high.
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“But because Texas’ rising energy demand and the drop of up to a million barrels of daily supply are temporary, levels above $ 60 seem appealing to bestsellers, ”warned Ipek Ozkardeskaya, Swissquote senior analyst, in a note to clients. “A downward correction could cause prices to drop below $ 55 a barrel easily, but it should not damage the positive medium-term trend in oil prices.”