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James Hyerczyk
WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Tuesday but off their highs. The markets spiked higher shortly after the early opening, supported by extremely cold conditions in Texas that shut wells in the biggest U.S. producing state. However, gains were capped by a wage deal in Norway that averted supply disruptions in Europe.

At 14:17 GMT, April WTI crude oil futures are trading $59.91, up $0.53 or +0.89% and April Brent crude oil futures are at $63.04, up $0.61 or +0.98%.

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Prices were also supported by a weaker U.S. Dollar that drove up foreign demand for the dollar-denominated commodity and optimism that the global rollout of coronavirus vaccinations would lead to a faster recovery in the global economy and oil demand.

Cold Weather Wreaks Havoc on Texas Oil Industry

Cold weather in the United States halted operations at Texas oil wells and refineries on Monday and forced restrictions on natural gas and crude pipeline operators, according to Reuters.

Texas produces about 4.6 million barrels per day of oil and is home to 31 refineries, the most of any U.S. state and including some of the country’s largest, according to EIA data.

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Middle-East Tensions Rise

Middle East supply concerns also rose after the Saudi-led coalition fighting the Houthi group in Yemen said on Monday it had destroyed an explosive-laden drone fired by the Houthis at the kingdom, the world’s biggest oil exporter.

Supply is already tighter in the Middle East with OPEC and its allies continuing to cut daily production. Saudi Arabia has pledged to cut 1 million barrels of crude output per day during February and March.

Norway Avoids Production Shutdown

In a move that helped cap prices, Norway’s industry employers struck a wage bargain with the Safe Labor Union on Tuesday, preventing a strike at the Mongstad crude terminal that could have forced major offshore oil and gas shields to shut.

Asia Distillates-Jet Fuel Cracks Hit 11-Month High as Flight Numbers Pick Up

Asian refining margins jet fuel jumped on Tuesday, hitting their highest level in more than 11 months, buoyed by an increasing number of scheduled flights.

Refining margins, or cracks, for jet fuel rose to $5.37 per barrel over Dubai crude during Asian trading hours, a level not seen since March 13, 2020. The cracks have surged 29% in the last two weeks.

For a look at all of today’s economic events, check out our economic calendar.
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