If things haven't gotten bad enough from the cold weather, add one more thing into the mix: refineries. Some Texas refineries have been reporting weather-related issues as of late, temporarily adding concern to traders already balancing many issues.
Preliminary reports show that Motiva shut a unit at its Port Arthur, Texas location, a facility that has a total capacity of 290,000 barrels per day.
In addition, Valero, ExxonMobil, and Shell all reported issues as well. Valero shut a unit at its 315,000bpd plant in Corpus Christi this weekend, and blamed the cold weather for the shutdown of another unit and other malfunctions. Corpus Christi woke up to temperatures of 24F on Friday, over 20 degrees under the normal for this time of year. Valero also reported problems at its McKee, TX refinery for a few hours this weekend. (READ MORE!)
ExxonMobil reported an issue with their massive Baytown, TX refinery as well, stating there was a restriction in a line that resulted in a leak. The facility can refine nearly 563,000bpd, and is the largest refinery in the United States. ExxonMobil also had sub-freezing temperatures result in frozen water seals at its Baton Rouge refinery capable of refining 503,000bpd.
Shell reported a problem with a unit at its Deer Park, TX refinery, capable of refining 332,000bpd, after a wet compressor was tripped up.
So not only is cold weather increasing demand for oil products, but its also getting so cold at some Southern facilities that production has been impacted to the point where its supporting higher prices.
There is some good news, however. The cold weather is expected to cease, and temperatures in the South should return to near normal, according to the Climate Prediction Center. Areas of the upper Midwest will actually see temperatures rise into the 30's and 40's, but don't expect it to last.
We may see oil prices begin to retreat slowly as the cold weather, the reason for much of the recent rally, retreats. Pump prices, however, still have some catching up to do, but the national average should not surpass $2.80/gal or 105c/L in Canada.