While the announcement of OPEC’s production cut was made in Vienna on Wednesday, news traveled fast creating a surge in the domestic crude oil futures market for the day. In Oklahoma, the OPEC deal is considered good news for oil and natural gas producers.
For the past few years, Oklahoma producers decreased output for economic reasons since the depressed commodity prices could not counter-balance the high costs associated with drilling new wells.
What does OPEC hope to get out of its production cutback? The cartel believes the limitation will boost plunging crude oil prices by drawing down on the vast inventories of crude oil currently held in storage.
“The move is good news for Oklahoma, where the oil and natural gas industry is the backbone of the state’s economy,” said Mike Terry, president of the Oklahoma Independent Petroleum Association. “Independent oil and natural gas production in Oklahoma accounts for one out of every six jobs, half of the state’s non-farm earnings and approximately 25 percent of all taxes paid in the state, and improved oil and natural gas prices resulting from OPEC’s production cut will be felt throughout the Oklahoma economy.”