Crude softens as winter storm curbs Gulf Coast demand
The WTI prompt-month contract slipped $0.40 to $60.67/Bbl on Monday morning (7:45 AM CT)
A severe winter storm is disrupting operations along the Texas Gulf Coast, affecting refiners, petrochemical facilities, and industrial manufacturers
Major operators including Exxon Mobil, Celanese, and Goodyear have curtailed or shut down activity at select facilities amid freezing conditions
For crude markets, the demand-side impact of industrial slowdowns is offsetting expectations that weather-related production disruptions would tighten supply
In Kazakhstan, supply risks appear to be easing as power systems at the Tengiz field move toward a restart
Tengizchevroil halted operations following fires at power generators, with Kazakhstan’s output expected to average roughly 1.0–1.1 MMBbl/d during the disruption, according to JPMorgan
Conditions at the CPC export terminal are also improving, with repairs completed at one offshore mooring and loadings now occurring from two jetties, easing backlog concerns
Geopolitical tensions remain elevated after the US deployed additional naval assets to the Middle East, reviving speculation over potential escalation with Iran
Together, lingering geopolitical risk and recent supply disruptions continue to provide near-term support to crude prices, even as expectations of a global surplus persist
Natural gas continues to climb amid winter storm impacts
The February Henry Hub contract (which expires on Wednesday) has gained another 52c, but traded as high as $6.30/MMbtu overnight
Winter storm Fern continues to push eastward, with weather impacts now reaching the Northeast after temperatures plunged across the South Central and Midwest this weekend
Weather models are showing temperatures well below the ten-year average for the next two weeks, although this current week is anticipated to be the coldest
Dry gas production is at 99 Bcf/d this morning, which is a slight improvement from the lows of 97 Bcf/d seen over the weekend
Freeze offs may increase as temperatures in the Northeast are expected to fall further today and tomorrow
LNG feedgas demand fell significantly, with inflows to export plants totaling 13.78 Bcf/d this morning and 12 Bcf/d yesterday
US power grids tested by demand surge (Bloomberg)
Unprecedented seasonal demand continues to impact US power grids, while snow and ice have resulted in more than 800k customers losing power
The PJM interconnection is preparing for seven consecutive days of extreme demand and has begun paying some large customers to reduce power consumption
ERCOT is forecasting record demand of 86 GW, surpassing the August 2023 record
Natural gas usage by the power sector has surged as generation from renewables has suffered in recent days
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