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US Crude Slips Below $60 As Texas Plans to Ramp Up Output

February 19, 2021 at 13:41 by Andrew Moran

US crude oil futures fell below $60 to finish the trading week as Texas begins to increase production following the blast of freezing temperatures and snow that paralyzed the state. After soaring past $61 for the first time in more than a year, oil prices have trended downward, making crude on track for a weekly loss.

March West Texas Intermediate (WTI) crude oil futures tumbled $0.98, or 1.62%, to $59.54 per barrel at 11:18 GMT on Friday on the New York Mercantile Exchange. WTI contracts are poised for a weekly dip of 0.3%, but they are still up nearly 23% year-to-date.

Brent, the international benchmark for oil prices, declined below $64 to close out the trading week. April Brent crude futures dropped $0.77, or 1.2% to $63.16 a barrel on London’s ICE Futures exchange. Brent is poised for a modest weekly jump of 0.75%, raising its 2021 to more than 22%.

This week, 100 million Americans were impacted by Arctic-like conditions. Texas endured the worst, with millions of people without power and a dozen or so dead. The devastating cold weather in both Texas and the Plains states reduced up to four million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas. Refiners also suspended about one-fifth of the nation’s processing amid power outages and severe cold.

Weather conditions are beginning to improve on Friday, with temperatures rising above freezing levels. Texas has ramped up output, with firms restarting production as electric power and water services slowly coming back online.

The US Energy Information Administration (EIA) reported on Thursday that domestic crude inventories declined by 7.3 million barrels to an 11-month low of 461.8 million barrels in the week ending February 12.

new report from Commerzbank called the latest rally in commodities, particularly for oil and copper, is “completely detached from reality” and “excessive.”

Nothing seems capable of halting the surge in oil prices at present.

This selective perception is characteristic of markets in phases of excess. Normally oil prices should have responded to such news by falling significantly because this will probably see up to 1.5 million additional barrels of crude oil reach the market per day in April.

On the geopolitical front, the US revealed that it is prepared to negotiate with Iran about returning both sides to a 2015 agreement to prevent Tehran from acquiring nuclear weapons. Despite the discussions, market analysts do not believe Washington will lift the Iranian oil sanctions.

In other energy commodities, March natural gas futures edged up $0.019, or 0.62%, to $3.101 per million British thermal units (btu). March gasoline futures surged $0.09, or 5.04%, to $1.8848 a gallon. March heating oil futures fell $0.015, or 0.82%, to $1.8078 per gallon.

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