2017 will be in all probability a year where oil and natural gas prices will recover. In 2016, oil and natural gas prices plummeted but ended on a strong note.
The Organization of Petroleum Exporting Countries (OPEC) reportedly agreed to cut down the production quotas. This saw oil prices steadily increasing, after 12-year lows, with the price set at $26 barrel in February 2016. The Domestic benchmark, West Texas Intermediate crude, was closed at $53.77 a barrel after it slipped nearly 29 cents.
Beginning in January 1, OPEC members agreed last month to cut down production by nearly 1.8 million barrels a day, meanwhile, Non-OPEC producers have agreed to cuts of an additional 558,000 barrels a day. The cut down on production has created an optimistic wave, which will find prices strengthening.
The same effect of the rise in prices has been also seen in Natural gas. In February 2016, the prices dipped to $2.60 per thousand cubic feet, and the prices reportedly surged over few months. There was a decline of 10 cents in the benchmark natural gas price, with $3.80 per thousand cubic feet. According to U.S. Energy Information Administration, the prices dipped despite withdrawals of 237 billion cubic feet from storage recently.
From February, the oil prices saw half the pre-downturn levels of nearly two and a half years ago. Meanwhile, companies with their improved technology and procedures were profitable even at lower prices.
After the finalising of 2017 budgets by oil and natural gas producers, there have been recent price gains. Even with this optimism, executives are being cautious in ramping up production, which would increase supply in the market, and thus causing prices to fall.
Executives could however, pad drilling plans, which would give a boost to rural Oklahoma communities which reportedly suffered the most during the oil industry downturn.
While analysts have been making predictions for 2017, there seems to be a consensus that both the industry and the broader state economy look stronger and would in all likelihood continue to improve with the co-operation of oil and natural gas prices.