Oil prices extended Thursday’s losses into Friday morning as power returned in most of Texas, and oil producers were preparing to begin restoring the output lost during the Texas Freeze.
As of 9:25 a.m. ET on Friday, WTI Crude prices were down 0.78 percent at $60.01 and Brent Crude was trading down 0.50 percent at $63.58.
Following a rally fueled by massive production shut-ins in Texas due to loss of power and frozen wellheads and equipment, oil prices turned lower on Thursday as the severe winter storms continued to move east.
On Friday, power was mostly restored across Texas, which accounts for more than 40 percent of all U.S. crude oil production.
At the height of the winter storm in the top oil-producing U.S. state, American crude oil production plunged by as much as 40 percent earlier this week as the Polar Vortex brought freezing temperatures to swathes of the United States.
Texas producers were expected on Friday to move to restart output, sources told Reuters, although the timeline for the full resumption of the shut-in barrels is still unclear.
Oil prices were additionally supported by comments regarding Iran from the U.S. State Department on Thursday after State Department spokesperson Ned Price said that “The path for diplomacy remains open. We hope to be able to pursue it together with our allies and partners.”
President Joe Biden has said he would pursue a return to the nuclear agreement, but only if Iran returns to full cooperation in its nuclear program activities. A potential return to the so-called Iran nuclear deal could mean the possible removal of the U.S. sanctions on Iran’s oil exports.
“Crude oil futures finally turn into a two-way market as the 65-dollar handle in Brent proved too much and the April front futures contract tumbled below 63.00 overnight before bouncing,” Saxo Bank said early on Friday.
“The US WTI future also corrected lower as the huge production interruptions from bitter cold weather in Texas began reversing, though we need more data on how quickly normal production can return as the disruption affected 40% of US oil output,” the bank’s strategists said.
By Tsvetana Paraskova for Oilprice.com
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Already have thrown Canada under the bus so clearly Southern California is next..