US crude production still down by 500,000 barrels per day (bpd) from winter storm, according to consultancy estimates
According to Energy Aspects consultancy, around half a million barrels of crude oil per day or 0.5% of the global supply was offline in the United States on Thursday as an Arctic blast gripped large areas of the country in the aftermath of a weekend winter storm.
This week, production outages in the U.S. as well as in Kazakhstan have led to an increase in U.S. benchmark oil futures to a five month high. On Thursday, oil prices rose by 3% due to fears that the U.S. would attack Iran.
Since Wednesday, production of around 100,000 bpd has been restored. The weekend saw a peak of around 2,000,000 bpd in outages. The Energy Information Administration forecast that U.S. crude production would total 13.76 millions bpd for January. This puts current outages around 3.6%.
According to Energy Aspects analyst Jesse Jones who said that production was rapidly recovering, the majority of remaining?outages occurred in the Permian basin in Texas and New Mexico. This area accounts for about half of U.S. Crude production.
Rystad analysts estimate that the Permian was experiencing outages at a rate of 247,000 bpd on Thursday.
J.P. Morgan analysts stated in a Thursday note that the U.S. will lose 340,000 bpd on average over the course of the month because of the cold weather. JPMorgan analysts said that the impact was worse than expected and that the average daily loss would be higher if recovery is slower.
Justin Kringstad said that the North Dakota Pipeline Authority director Justin Kringstad announced on Thursday that nearly all production in North Dakota was now back online. North Dakota, which is the third largest oil producing state in the United States, produced 1.189 million barrels per day (bpd) in November according to the latest data available from the Industrial Commission.
The prices of West Texas Intermediate crude delivered to Magellan East Houston terminal and Midland have been rising for four consecutive sessions. Over that time, both assessments rose 25 cents, to 90 cents or $1.20 respectively.
Matt Smith, Kpler's lead oil analyst, said that U.S. crude has rebounded since no loadings were made on Sunday.
Smith stated that the average crude exports over the past three days was 3.2 million?bpd. They are expected to end the week at a slower pace than normal, possibly at 3 million bpd instead of the usual 4 million bpd.
Wood Mackenzie, a consultancy, says that natural gas production is down by 6.1 billion cubic foot per day. This compares to Monday's peak loss of 18.1 bcfd. According to the IEA's estimates, total natural gas production is expected to reach 119.9 bcfd by January. This would put Thursday's outages around 5.1% of that total.
Refineries on the U.S. Gulf Coast have reported problems related to freezing temperatures over the weekend. However, they are also beginning to recover.
"We saw a 40% increase in wholesale liftings over the weekend prior to the winter storm. Gary Simmons, the COO of U.S. refining company Valero said on Thursday that fuel sales at their refinery have been soft but slowly recovering. (Reporting from Georgina McCartney, in Houston, and Nicole Jao, in New York. Editing by Liz Hampton and Nia Williams; Will Dunham and Paul Simao, and David Gregorio.)
(source: Reuters)