Overview
A severe winter storm that swept across large parts of the United States over the weekend led to widespread production disruptions in the energy sector, with analysts and traders estimating crude output losses of up to 2 million barrels per day - roughly 15% of U.S. production. Consultants at Energy Aspects estimated that production outages peaked on Saturday, with the Permian Basin accounting for the largest portion of the decline.
Permian and U.S. production impacts
Energy Aspects estimated the Permian Basin likely experienced about 1.5 million barrels per day of the total crude outage at the storm's peak. By Monday, production losses had begun to ease, with Permian shut-ins estimated at about 700,000 barrels per day. Industry sources expect production to be fully restored by January 30.
One producer directly affected, ConocoPhillips, reported Permian crude production was down by 175,000 barrels per day as of Sunday because of frigid weather, according to a source familiar with the matter who was not authorized to speak on the record. A company spokesperson noted that ConocoPhillips typically does not comment on day-to-day operations.
Outside the Permian, output in North Dakota - the nations third-largest oil-producing state - was estimated to be down roughly 80,000 to 110,000 barrels per day as of Monday morning, according to Justin Kringstad, Director of the North Dakota Pipeline Authority. Associated wellhead natural gas production tied to oil activity was also estimated to be reduced by between 0.24 and 0.33 billion cubic feet per day.
Market reaction
U.S. crude futures were trading at about $60.60 a barrel at 2:00 p.m. EDT, roughly 50 cents lower on the day. Natural gas markets reflected the production disruptions as well: front-month gas futures rose 80 cents, or 15.2%, to $6.075 per million British thermal units, placing them on track for their highest close since December 2022.
Refining, petrochemical and processing disruptions
Freezing conditions affected downstream sites as well. A regulatory filing reported that hatches were frozen open during the storm on Sunday in Midland, Texas, at a Chevron site. Several refineries along the U.S. Gulf Coast reported weather-related issues, and Exxon Mobil shut units at its Baytown, Texas, petrochemical complex on the east side of Houston.
Regulatory filings over the weekend documented roughly two dozen upset reports at natural gas processing plants and compressor stations in Texas. Analysts at TACenergy noted that the number of weekend upsets was small compared with the more than 200 reported during the first five days of a severe winter storm in 2021.
Natural gas output and power sector strain
Average natural gas output in the Lower 48 states fell to 106.9 billion cubic feet per day so far in January, down from a monthly record high of 109.7 bcfd in December, according to LSEG, as producers shut in production in response to the cold. The Arctic blast also left significant portions of the power system under stress.
Some 810,000 customers across the United States remained without electricity on Monday following the weekend storm, which brought heavy snow, sleet and freezing rain from the Ohio Valley and parts of the mid-South to New England. The weekend event knocked out power to more than a million homes and businesses along the U.S. Gulf Coast and Southeast, including in Texas. Cold temperatures were expected to persist in parts of the country in the coming days.
The largest U.S. grid operator, PJM, anticipated generation outages for Monday would rise to 22.4 gigawatts, or about 16% of total committed capacity, with most outages expected in Dominion Energys Mid-Atlantic territory, according to PJM data. Demand on the PJM system was 124 GW on Monday morning, slightly above the forecast of 123.3 GW, and PJM continued to meet demand per its operations data.
Wholesale electricity prices fluctuated sharply. Spot prices averaged about $200 per megawatt hour, recovering from temporary weekend spikes that topped $3,000 per MWh. Next-day prices in New England rose about 82% to $313 per MWh, while PJM West prices in Pennsylvania and Maryland surged about 360% to around $413 per MWh, their highest levels since January 2014.
Restoration timeline and outlook
Industry estimates indicated that crude production losses were diminishing by Monday and that U.S. producers expected to restore output fully by January 30. The persistence of cold temperatures and continued weather impacts were noted as factors to monitor, as they could influence the speed of recovery for both oil and gas operations and for the power grid.
Concluding summary
The weekend winter storm produced a near-term disruption across the U.S. energy complex - curtailing crude and associated gas production, triggering refinery and petrochemical outages, and straining power systems. While analysts reported an easing of shut-ins by Monday and a target date for full crude restoration, the event underscored vulnerabilities in operations and infrastructure when extreme cold moves through major producing regions.