Motiva Oil Refinery has closed its Port Arthur Production Complex, the largest American oil refinery, due to freezing temperatures.
“We are closely monitoring the weather conditions and will resume normal operations as soon as it is safe,” a Motiva spokesman said.
The long way back
The last time the price of oil in West Texas was set at more than $ 60 was January 7, 2020. When reports of coronavirus infections began to spread.
Just three months later, as travel stopped and oil demand fell to the floor, an inappropriate price war between Russia and Saudi Arabia led to an excessive supply. On April 20, oil became negative for the first time, falling to -40.32 dollars and settling below zero the day before returning.
Since then, the outlook for oil has improved decisively: the US economy has grown at a record pace in the third quarter of 2020, and air travel has reached pandemic records during Thanksgiving and Christmas.
Oil rose steadily until August, holding a holding pattern of nearly $ 40 for several months. However, since election day, oil has risen again, rising by 64%, as the prospects for economic stimulus and vaccines have increased.
Prices are rising
Texas winter weather was another boost. US oil rose 1.1 percent to $ 60.12 on Monday. Brent oil, a global benchmark, was 1.4% higher at $ 63.30 a barrel.
Higher oil prices could eventually bring in gas prices, which have risen even higher in recent months. Although the two goods are not directly correlated, oil is the main component of gasoline and can help gas prices trade more or less.
A gallon of gas rose to an average of $ 2.51 a month in the United States, according to AAA. This is 7 cents higher than a year ago and 14 cents compared to last month. Gas prices fell to $ 1.77 a gallon in April.
Speculation?
But the return of energy prices may not be based on expectations that demand will return. The journey has returned, but it remains of little value compared to what it was before the pandemic, and business travel could take years to return to normal. The shuttles are probably dead forever for millions of workers who will continue to work from home long after the Covid-19 is in the rearview mirror. And oil companies are betting on a future dominated by green energy.
BP, Shell and Total unveiled commitments to reduce their greenhouse gas emissions to zero by 2050, and CEOs spoke of the urgent need to develop new lines of business to offset low oil demand. . Exxon has announced that it will invest $ 3 billion in technology that reduces emissions by 2025. And President Joe Biden has made the fight against climate change a top priority. He announced that the United States would join the Paris climate agreement on its first day in office and quickly halted new oil and gas leases on federal land.
Although oil demand could eventually return – perhaps for years – all those factors that weigh on fossil fuels suggest that much of the oil recovery could be part of the asset bubble that fuels the massive risk of stocks, other commodities. and digital currencies such as bitcoin.
Only time will tell to determine how much room oil is left to run. In the meantime, investors are happy, and drivers could pay more at the pump.
– Julia Horowitz and Alison Kosik of CNN Business contributed to this report
