The latest energy index from the Oklahoma Independent Petroleum Association indicates signs of hope remain for the state’s oil and gas industry despite its overall decrease.
Released on Wednesday by the OIPA, the index showed oil and natural gas industry employment held steady for the month and drilling activity in Oklahoma increased from 72 to 77 drilling rigs. Optimism for the oil and natural gas industry continues as prices further stabilize following the recent production cut agreement from OPEC and the election of what appears to be an energy-friendly president, according to the OIPA report.
A $4 decrease in crude oil prices and a 14 percent fall in natural gas prices ended three consecutive months of growth on the Oklahoma Energy Index.
Average spot crude oil prices fell from $49.78 to $45.71 while the monthly average for natural gas prices fell from $2.98 to $2.55.
“Even though energy prices dipped in November, the overall factors in the Index show signs of stability,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “These trends indicate the possibility of strengthening further in 2017.”
Considered to be a comprehensive measure of the state’s oil and natural gas production economy, the index tracks industry growth rates and cycles. It is also a joint project of the OIPA, Bank SNB and the Steven C. Agee Economic Research and Policy Institute.
The index of oil and natural gas industry activity decreased to 163.2 using data collected in November which is a one percent decrease from the previous month.
“Both the election and OPEC agreement seem to offer a temporary reprieve to excess uncertainty in energy markets,” said Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute. “Early proposed cabinet appointees indicate an easing of regulations and leasing bureaucracies that have frustrated industry activity while the OPEC agreement signals a lower bound price and consequent financial distress tolerable by principal OPEC members. Optimism is developing for a slight increase in global economic activity which, when coupled with production restraints, could find global oil markets rebalanced as early as the middle of 2017. As markets rebalance and onshore regulations and bureaucracies lessen, Oklahoma will be poised to benefit from its location central to several major low-cost oil plays.
