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Oil & Natural Gas Prices Soar on Sustained Winter Blast

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The sharp drop in temperatures across the United States has curbed crude production from some regions. With a number of oil wells shut in due to a winter storm and a blast of arctic snow, there are fears of further widespread losses in domestic output.

In fact, industry observers believe that the deep freeze is causing daily production loss to the tune of 2 million barrels (or, nearly a fifth of the country’s overall volumes) with the primary casualties being West Texas’ Permian Basin as well as the Eagle Ford in southern Texas and the Anadarko Basin in Oklahoma. Such has been the extent of disruption that Occidental Petroleum (OXY - Free Report) — one of the largest producers in the Permian Basin — had to declare force majeure (or legal suspension of delivery contracts) to suppliers.

At the same time, the cold snap has caused outages and stalled pipeline operations. Finally, the unprecedented weather has forced the temporary closure of refineries including Zacks Rank #1 (Strong Buy) Royal Dutch Shell’s (RDS.A - Free Report) Deer Park and ExxonMobil’s (XOM - Free Report) Baytown and Beaumont.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

With the cold blast-related complications limiting oil production in a big way, the commodity has been gaining momentum over the past few days. Earlier this week, U.S. prices breached the $60-a-barrel level for the first time since January 2020.

Apart from pushing crude prices to levels not seen in 13 months, the winter cold and snowy storm has also resulted in strong natural gas demand. A ramp up in the use of heaters on the back of a frigid winter has catapulted natural gas futures to over $3 per MMBtu on the New York Mercantile Exchange. Consequently, gas producers like Comstock Resources (CRK - Free Report) , CNX Resources (CNX - Free Report) , Range Resources (RRC - Free Report) and SilverBow Resources (SBOW - Free Report) have been on a tear lately.

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