Oil reached a pandemic high on Monday, with WTI crude futures rising 62 cents a barrel, or one percent, settling at $60.09 per barrel. Earlier in the rally, it had reached $60.77 a barrel, a level not seen since January 2020 during pre-pandemic days.
Thus far, in 2021, WTI futures are 24 percent higher.
Brent crude also rose by 1.4 percent to $63.33, a 13 month high.
Freezing weather throughout the U.S. has prompted higher demand for the commodity but is also threatening Texas oil production.
Andy Lipow, an oil analyst, noted, “Frigid weather means that many oil wells may be shut-in. Water is produced along with oil, that water can freeze up equipment. The cold air affects oil production in Canada, North Dakota, Oklahoma, Texas, and elsewhere.”
Many areas in Texas, including Houston, have been dealing with a significant winter storm warning that has disrupted travel and halted work production. This prompted a rally in the energy market.
“Winter storm and arctic blast of cold weather that is making its way south to Houston may have some severe impacts on the oil industry,” wrote Lipow.
According to the National Weather Service, over 150 million Americans were under some winter weather advisory on Monday. The governmental weather agency predicted a major winter storm that would dump heavy snow and ice from the Ohio Valley to the Northeast and down to the Southern plains.
Lipow of the Texas oil firm, Lipow Oil Associations, said the winter storms would likely slow operations and that some refineries could expect to see outages. He also said Americans could thank the winter weather disruption for higher gas prices at the pumps.
In the past week, regular gasoline rose from $2.41 to $2.46 per gallon. Analysts say that gas prices will likely climb higher.
The latest crude rally is an extension of oil’s rebound. The pandemic had shut down demand for petroleum prices over the past year, sending crude prices in a downward spiral since last April.