Texas Emerges From Deep Freeze
February 22, 2021
On Friday, Texas energy firms began to prepare for oil and gas production after days of frozen shutdowns as electric power and water services slowly resumed at oilfields and refineries. It will take several days for il field crews to deice valves, restart systems, and begin oil and gas production. US Gulf Coast refiners face five to seven-day restarts with low water pressure to hamper operations even as power is being restored. According to analysts, Texas and the Plains states’ freezing weather curtailed up to 4 million barrels per day of crude oil production and 21 billion cubic feet of natural gas. Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
The recovery of all these plants and wells will likely impact inventory reports in the coming weeks. How these restarts go will impact reports, and if we see big draws in supply, it could support prices or create some upside.
US energy firms this week cut the number of oil rigs by one to 305 rigs. The decline of the one oils rig is the first in 12 weeks, which is the longest streak of increases since June 2017.
The United States officially rejoined the Paris climate agreement on Friday. The Biden Administration plans drastic emissions cuts over the next three decades.
A senior EU official said the European Union is organizing an informal meeting with all Iran nuclear deal participants and the United States. The official said no invitations had been sent and there is no time frame for the meeting, but world powers want to revive the nuclear deal as quickly as possible.
OPEC+ meets on March 4th, and it will be interesting to see what they decide. OPEC sees US shale production reduced despite the current higher prices. Russia has been pushing for more production, so it will be interesting to see their comments. The market has assumed that Saudi Arabia will increase by their additional voluntary cuts at some point, either in March or April, but they have also been the most vocal about being cautious about ramping up production too quickly.