Motiva oil refinery closed the Port Arthur manufacturing complex, America’s largest oil refinery, due to freezing temperatures.
“We are closely monitoring the weather conditions and will resume normal operations as soon as it is safe,” a Motiva spokesman said.
The long way back
The last time the price of oil in West Texas settled above $ 60 was on January 7, 2020. It was just when reports of coronavirus infections began to spread.
Just three months later, when travel stopped and oil demand fell to the ground, a timeless price war between Russia and Saudi Arabia led to a massive supply shortage. On April 20, oil was negative for the first time, plummeting to -40.32 dollars and settling below zero the next day before recovering.
Since then, the oil outlook has improved dramatically: the U.S. economy grew at a record pace in the third quarter of 2020, and air travel hit pandemic records during Thanksgiving and Christmas.
Oil rose steadily until August to remain in a retention pattern near $ 40 for several months. But since election day, oil has risen again, rising 64%, as the prospects for economic stimulus and vaccines have grown.
Prices are rising
The winter weather in Texas served as another boost. U.S. oil rose 1.1% to $ 60.12 on Monday. Brent crude, the world benchmark, was up 1.4%, at $ 63.30 a barrel.
Higher oil prices could end up making gas prices, which have been rising in recent months, even higher. Although the two commodities are not directly related, oil is the main component of gasoline and can help market gas prices more or less.
A gallon of gas rose to $ 2.51 on average in the United States on Monday, according to AAA. That’s 7 cents more than a year ago and 14 cents more than last month. Gas prices fell to $ 1.77 a gallon in April.
Speculation?
But the rise in energy prices may not be related to the expectation that demand will return. Travel has picked up, but it is still a misery compared to what it was before the pandemic, and business travel could take years to return to normal. Displacements are probably dead forever for millions of workers who will continue to work from home long after Covid-19 is in the rearview mirror. And oil companies are betting heavily on a future dominated by green energy.
BP, Shell and Total presented commitments to reduce their own greenhouse gas emissions to zero by 2050, and their CEOs spoke of the urgent need to develop new lines of business to offset the reduction. of oil demand. Exxon announced it would invest $ 3 billion in technology to reduce emissions by 2025. And President Joe Biden has made the fight against climate change a priority. He announced that the United States would rejoin the Paris climate deal on its first day in office and quickly stopped new oil and gas leases on federal lands.
Although ultimately the demand for oil could recover, perhaps for years, all these factors weighing on fossil fuels suggest that much of the oil recovery could be part of the asset bubble that would fuel the massive accumulation of stocks, other commodities and digital currencies such as bitcoin.
Only time will tell to determine how much oil is left to run. Meanwhile, investors are satisfied and drivers may pay more at the pump.
– CNN Business’s Julia Horowitz and Alison Kosik contributed to this report
