DTN Oil

WASHINGTON (DTN) -- Following this week's explosive rally, crude futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange plunged on Friday, sending nearby month West Texas Intermediate below $60 per barrel (bbl) on the expected return of power supplies to Texas refineries and oilfields after six days of deep freeze that severely disrupted oil production and processing, distribution, and demand in the Lone Star State.

Although power is seen slowly returning to millions of Texan households and businesses, it remains unclear how quickly refiners and oil producers would be able to restart operations. Some of the state's largest refineries are discovering widespread damages to equipment and processing units, according to overnight reports, raising the potential for prolonged fuel shortages that could spread across the country.

Bloomberg News reported that ExxonMobil Corp.'s Baytown and Beaumont plants, Marathon Petroleum Corp.'s Galveston Bay refinery and Total SE's Port Arthur facility all face at least several weeks to resume normal operations. The cold snap and power outages affected 20% of the nation's refining capacity this week, taking offline about 4 million bpd of oil processing capacity.

DTN Weather forecasts the extreme cold in the southcentral United States will begin easing on Friday, with temperatures returning to above normal within the next four to five days. This should allow for some of the earliest restarts to begin this coming weekend.

In early trade, WTI futures for March delivery plunged $1.17 to trade near $59.33 bbl and the Brent April contract fell below $63 bbl, retreating 96 cents from Thursday's close. WTI and Brent fell the most in two weeks on Thursday as investors booked profits following a five-day rally that propelled both contacts to their highest trades in over a year.

NYMEX March ULSD futures declined 1 cent to $1.8265 gallon and March RBOB futures were up 1.3 cents near $1.8075 gallon.

On the economic calendar, eurozone's overnight data once again showed a growing gap between robust manufacturing and the still-soft services sector, with flash reading on Purchasing Manufacturing Index for February clocking in at 48.1, meaning contraction. Virus-related restrictions continued to affect businesses in leisure and hospitality industries across Germany and France, depressing economic activity to the lowest in three months. The service sector downturn was offset, however, by faster manufacturing growth, led by Germany.

Later Friday morning, investors will get a first look into U.S. PMI for February, with consensus calling for a steady reading in both manufacturing and services. This week's U.S. economic data was mixed, underscoring an uneven recovery where consumer spending and manufacturing output outperforms the labor market. Weekly unemployment claims unexpectedly jumped above 800,000 during the week ended Feb. 13, with large states California and Illinois once again driving the increase.

Liubov Georges can be reached at liubov.georges@dtn.com