MIDLAND, Texas — It hasn't been a great year for the oil industry, and that's putting it nicely. However, the industry is slowly working towards a recovery. The oil and gas industry isn't anywhere close to the levels it was at prior to the pandemic, but at $45 a barrel? Economists are feeling good considering where the industry has been.
Economists are also saying that we should accept that we won't have that booming economy that we saw prior to the pandemic anytime soon. However, OPEC made some moves today to help keep prices stabilized. Combine that with the news of the COVID-19 vaccine and the industry is seeing continued recovery.
"Today it’s around $45 per barrel, so we’ve had a nice recovery in the price itself. Hopefully, that will continue, OPEC will continue to restrict their supply and that will allow us to climb up hopefully into the mid-50s next year," Mickey Cargile, president of Cargile Investment Management, said.
With the news that a COVID-19 vaccine is only weeks away from distribution, the price of oil is expected to continue to make the slow steady climb upwards.
"As we get the vaccine, economies return to normal, not just in the U.S. but worldwide. That will help prop up prices again and increase demand for energy," Cargile said.
Just the announcement of the vaccine back in early November helped raise oil stocks almost immediately.
"In the month of November, oil stocks were the top producing asset class in the stock market. So there was a lot of promise that came with that and now some higher expectations that there will be increased demand for energy," Cargile said.
According to Cargile, there's one real big takeaway from all of this: it's only up from here.
"It’s very positive news for us not from the standpoint that we’re getting back to the boom era economy, but just simply that it stopped getting worse. So now we have that base and consistency in price that we can start drilling again," Cargile said.
Back when the pandemic really took hold of the world back in March, OPEC cut their production of oil significantly. Now, as the price of oil recovers, it appears that OPEC will start adding 500,000 barrels to their supply every month and we look to see how the market reacts as economies around the world recover from the pandemic.