Natural gas and oil prices saw a sharp incline as parts of US struggle with energy demands and rolling blackouts following Monday’s freeze.
Natural gas for March climbed 22 cents to settle at $3.129 per million British thermal units (+7.5%) before market close on Wednesday. West Texas Crude oil saw an increase of 58 cents per barrel, up to $60.05 (+1%), with Brent crude rising by 5 cents to $63.35 a barrel (+0.1%). Prices for trading oil on the Nymex rose steeply to $1.7729 a gallon (+4.8%).
This latest squeeze on the energy market is in large part due to supply chain problems and power outages caused by Monday’s winter freeze.
On Monday, the Electric Reliability Council of Texas estimated 2 million people were without power, causing President Biden to announce a state of emergency. Southwest Power Pool, responsible for utility coverage in 14 states, announced utility rollbacks and rolling blackouts in order to contend with supply shortages.
This shortage comes as tensions between Saudi and Houthis rebels continued in the Middle East. Analysts believe that this has contributed to the steep increase in oil prices, although most believe that the shortages of supply in the US are the largest factor in the price hike.
Financial advisors and economists agree that the current price of oil is not sustainable, but also affirmed that a correction in prices would not hurt oil markets in the long term.