This Week’s Market Buzz

  • Permian oil production has plunged by as much as one million barrels a day as the coldest weather in 30 years brought havoc to a region that seldom faces frigid Arctic blasts, according to the Houston Chronicle. Oil traders and company executives, speaking on condition of anonymity, lifted their estimate of supply losses in the region as the temperature in Midland, the capital of the Permian basin, dropped to -1 F (-18 C), the lowest since 1989, according to the U.S. National Weather Service. Traders had previously estimated losses at several hundred thousand barrels per day.
  • Oil prices fell at press time despite a sharp drop in United States crude inventories, as market participants took profits following days of buying spurred by a cold snap in the largest U.S. energy-producing state. Brent crude fell 41 cents, or 0.6%, to settle at $63.93 a barrel. During the session it rose as high as $65.52, its highest since January 2020. West Texas Intermediate (WTI) crude futures fell 62 cents, or 1%, to settle at $60.52 a barrel, after earlier reaching $62.26, the highest since January 2020.
  • Vista Proppants and Logistics LLC commenced operation of a transload terminal facility to facilitate enhanced delivery of frac sand into the Midland and Delaware Basins of the Permian Basin. The terminal, which is located near Vista’s West Texas mine in Monahans, Texas, will allow for the efficient shipment of frac sand via railcars from the company’s West Texas mine. Gary Humphreys, Vista’s chief executive officer, commented, “There has been tremendous growth in the amount of frac sand produced in West Texas. The related increase in truck traffic has resulted in significant congestion on the local and regional road system, which will be further pressured as additional announced production comes online. Increased road congestion is leading to inefficiency in truck turn times, which results in higher costs for all parties, the need for more trucks and more qualified drivers. Through the development of a transload terminal facility located very close to our West Texas mine, we will be able to deliver our products via railcar in multiple directions into key markets in the Permian. The result will be cost savings through higher utilization of our truck fleet by lowering the distance to wellhead and – most importantly – superior reliability and surety of supply for our customers which ultimately lowers their cost.”

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