Brent Price Slides to $63.31 over Idle Refineries in Texas
The International benchmark Brent crude trades at $63.31 per barrel early this morning after falling 0.96% from Thursday close at $63.93 a barrel.
On Friday, oil prices declined on despite a sharp drop in US crude inventories, as investors are now concerned with lower demand from idle refineries in Texas hit by freezing temperatures.
The price of OPEC basket of thirteen crudes stood at $63.43 a barrel on Thursday, compared with $63.04 the previous day, according to OPEC Secretariat calculations
American benchmark West Texas Intermediate (WTI) was at $59.73 per barrel at the same time for a 1.31% increase after it ended the previous session at $60.52 a barrel.
Oil prices have been on a bullish trend for four straight sessions over a snap cold in the largest US energy-producing state of Texas, which brought almost 65% of the production in the region to a halt.
With diminished supplies from disruptions in the region, oil prices are declining due to lack of demand, as investors are concerned that refineries will remain offline for some time for maintenance even after temperatures rise.
The downward trend was also spurred by investor expectations that crude oil futures will start underperforming when the weather-related supply drop recovers.
Limiting further declines, US crude oil inventories declined last week, signaling an uptick in crude demand in the US, the world’s largest oil consumer.
US commercial crude oil inventories fell by 7.3 million barrels, or 1.5%, to 461.8 million barrels, relative to the market expectation of a build of 2.2 million barrels, according to data released by the EIA on Thursday.
Microchip manufacturing companies in Texas halted production Thursday because of power cuts amid severe winter conditions in the US state.
The work stoppage could have a devastating effect on everything from electronics to the auto industry.
Samsung announced that it “gradually halted operations” at a plant in Austin on orders by local power utility providers.
Dutch-American NXP semiconductors, which provides chips for automotive and digital networking industries, also stopped manufacturing in the same area.
Chipmakers in the US last week demanded that Congress provide federal funds to the critical industry, as some business groups are planning to send a letter to the White House later Thursday asking President Joe Biden to support the move.
The Semiconductor Industry Association (SIA), which represents 98% of the US semiconductor industry by revenue, sent a letter last Wednesday to Biden urging him to include substantial funding for semiconductor manufacturing and research in the administration’s economic recovery and infrastructure plan.
While the US had a share of 37% in global chip manufacturing during the 1990s, that figure fell to 12% as of last year, SIA noted.
“This decline is largely due to substantial subsidies offered by the governments of our global competitors, which have placed the US at a competitive disadvantage,” said the letter.
SIA President and CEO John Neuffer stressed semiconductors power essential technologies that include sectors such as health care, communications, clean energy, computing and transportation have kept the country and the economy afloat during the coronavirus pandemic.
Biden, meanwhile, has asked Taiwan for help to find a solution to the pandemic-caused global chip shortage that is hurting the American auto industry, according to his top economic adviser Brian Deese.
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Extreme winter conditions have so far claimed at least 37 lives in multiple states, majority of them in Texas.
Brent Price Slides to $63.31 over Idle Refineries in Texas
