Energy prices rallied this week due to freezing weather across the US.
West Texas Intermediate crude is on pace to settle above $60 per barrel for the first time since the start of the Covid-19 pandemic.
WTI futures rose 62 cents on Monday, bringing WTI crude futures up 24% so far this year.
Brent crude, the international benchmark, rose 1.4% to $63.33 after hitting its 13-month high.
The rally in crude came as cold weather spread across more than 22 states and created a demand for power and fuel while threatening production in Texas at the same time.
Southwest Power Pool, a group of utilities covering 14 states, ordered rolling blackouts to cope with a low reserve energy supply.
Below freezing temperatures often lead to production shutdowns. Water is usually produced alongside oil and can freeze equipment, halting production.
More than 150 million Americans are under a winter weather advisory, per the National Weather Service. The NWS predicted a “major winter storm,” likely to dump heavy snow and ice from as far west as Albuquerque across the country to New England and as far south as San Antonio.
Wind-powered generators in Texas were forced to go offline, causing spikes in electricity prices. Two million people were without power in Texas on Monday.
While the winter storm isn’t as severe as hurricanes that often halt production while ravaging the Gulf Coast, the storm will likely slow operations and lead to outages. Texas Gulf Coast refineries typically produce more than 3 million barrels per day.
The storm is also to blame for a rise in gasoline prices over the last week.
The average price per gallon of regular gasoline rose to $2.64 from $2.41 last week. Analysts expect gas prices to climb further this week.
The recent rally in crude prices also marks an extension of the oil market’s rebound since the pandemic slashed demand for petroleum products for most of 2020.