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US Winter Storm Impacting Oil Markets
Pipelines in Storm’s Path Include Centurion and Basin Systems, Owned by Plains All American and Energy Transfer, Respectively
Frigid weather sweeping across much of the U.S. is starting to freeze oil and natural gas wells, threatening to disrupt production from North Dakota to Texas.
Crude output in North Dakota’s Williston Basin declined Jan. 23 by roughly 7%, or 80,000 to 110,000 barrels a day, as temperatures dropped to as low as -16 F, with forecasts calling for -29 F on the night of Jan. 24.
The Permian Basin of West Texas and New Mexico, which pumps almost 7 million barrels a day, also is at risk as sleet, snow and subfreezing temperatures are forecast through Jan. 26.
“If you look at previous freeze-off events, we usually lose 2 to 3 million barrels a day, and this event looks like three days,” said Scott Shelton, an energy specialist at TP ICAP Group, adding that any impact should be manageable given the size of the global market.
MORE: Much of Nation Braces for Massive Winter Storm
North Dakota is particularly vulnerable to prolonged cold snaps, which can shut down wells and slow restarts even when temperatures recover. Last month, a cold snap knocked out about 50,000 to 80,000 barrels a day of production, while a freeze last February halted as much as 150,000 barrels a day.
Physical crude prices in North Dakota are showing early signs of tightening, with Clearbrook barrels strengthening to a 60-cent discount to West Texas Intermediate on Jan. 22 from 95 cents a day earlier, according to Modern Commodities.
Major winter storm expected to affect much of the country. Conditions may call for extra caution & preparation.
Remember: check tires, brakes, lights & wipers; clear ice/snow; carry an emergency kit; slow down, increase distance, watch for ice/whiteouts, & pull over if needed. pic.twitter.com/euGoUjeAbS — FMCSA (@FMCSA) January 22, 2026
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While global oil supplies are ample enough to absorb brief weather-driven disruptions and refinery processing rates, prolonged outages could roil regional markets and strand barrels if pipeline operations are curtailed.
Pipelines in the storm’s path include the Centurion and Basin systems, which carry crude from the Permian Basin toward Cushing, Okla., a key U.S. storage and trading hub. The Basin line is owned by Plains All American Pipeline and the Centurion System is operated by Energy Transfer.
Plains All American and Energy Transfer rank Nos. 67 and 76, respectively, on the Transport Topics Top 100 list of the largest private carriers in North America.
The companies didn’t immediately respond to requests for comment on storm preparations and potential changes to operations.
Past winter storms show how cold weather can hit oil output, though the Permian region may be better prepared this time. During Winter Storm Uri in February 2021, oil production in the region fell an estimated 15.8%, according to East Daley Analytics, even as output recovered in the months that followed.
Texas Railroad Commission Chairman Jim Wright said the state has since improved its preparedness, including by increasing natural gas storage at power plants.
“I’m very confident that we’re going to be in very good shape,” Wright said. “We’ve increased our storage on natural gas today by one-third.”
Despite the risk of freeze-offs, physical crude prices in West Texas have softened. The WIT Midland discount to Cushing widened to about 74 cents a barrel Jan. 22, weakening from earlier in the week, according to data compiled by Bloomberg.
The move suggests traders may be more focused on the risk of reduced refinery demand from cold-weather disruptions than on immediate supply losses in the Permian Basin.
Refinery utilization slipped about 2% in recent days, raising concerns that extreme cold may impact crude supply and processing capacity at the same time. U.S. refiners are taking precautions, with some facilities running at reduced rates due to the cold, Reuters reported.
Despite the challenges, Pemex Deer Park refinery in Texas doesn’t plan to curtail crude runs, said a person with knowledge of the situation, who asked not to be named discussing private matters. The 320,000-barrel-a-day facility is mostly focusing on reliability checks of power supply and natural gas. It also took steps to keep sulfur inventories low to avoid a backlog in case the Houston Ship Channel — the waterway to several refiners, including Deer Park — is closed for an extended period.
Natural gas markets have reacted more sharply. Energy Aspects estimates the storm may cut tens of billions of cubic feet of U.S. gas output over the next two weeks as water freezes inside pipelines, pushing prices higher.
