Cold temperatures in US areas have injected new momentum into the rally in the energy markets, putting West Texas Intermediate oil on course to close above $ 60 a barrel for the first time since the early days of the Covid-19 pandemic.
WTI crude futures gained 1.8% to $ 60.53 a barrel on Monday morning, extending its 2021 advance to 25%. Brent crude, an international benchmark, rose 1.2% to hit the 13-month high of $ 63.20 a barrel in London. Natural gas futures at Henry Hub, Louisiana, rose 3.3% to $ 3.01 per million British thermal units.
The new step in recovering the energy market from the coronavirus shock came when a blast of cold weather increased the demand for energy and fuel, while threatening to bring down oil production in Texas. More than 150 million Americans are under some kind of winter advice, the National Weather Service said on Monday. The agency is forecasting heavy snow and significant ice on the southern plains and in the Ohio valley to the northeast.
Some analysts think investors have pushed oil prices above levels justified by supply and demand, but others expect them to remain dynamic.
“We have not seen any surprising factors that could prevent this type of rally, at least not yet,” said Carole Nakhle, chief executive of consultancy Crystol Energy. Demand is recovering, oil stocks that exploded last year are decreasing and the Organization of Petroleum Exporting Countries is withholding millions of barrels a day from the market, she added.