An uncharacteristic deep freeze in the deep South has swept through oil and natural gas-producing states like Texas, causing power outages affecting millions. Over three million people are without power in Texas, while nearly 5 million are sans power nationwide.
Global warming experts have said for years that increased global temperatures will lead not just to hotter summers, but deep freezes in places that haven't been this cold for thousands of years. Bad news for both humanity long-term, but good news shorter-term for oil and gas stocks.
Temperatures below four degrees Fahrenheit in Texas have wreaked havoc on the state's energy infrastructure.
Wholesale energy prices have skyrocketed as demand for energy rises and production falls. WTI crude oil was up 0.52% to $59.77 per barrel this morning, just shy of a more than one-year high of more than $60.80. Natural gas futures were up 5.8% to $3.079 per million British thermal units on Tuesday, trading at around the highest levels since November.
Brent crude oil, the international benchmark, was down 0.33% to $63.11 a barrel, still around a one-year high.
Oil and gas stocks were up across the board. The energy sector overall is up around 20% since the beginning of the year as the reflation trade continues to stay hot.
“The reflation trade is set to continue to gather steam with vaccine deployment and massive fiscal spending by the Biden administration,” said Esty Dwek, head of global market strategy for Natixis Investment Managers Solutions, as quoted by Bloomberg.
“Yields are likely to rise further and the catch-up of cyclical sectors should continue.”