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Oil prices dropping due to COVID surge

Drops in oil can be cause for concern, especially an $8 drop. Some local oil leaders believe this is only a temporary setback, however.

MIDLAND, Texas — Oil currently sits at about $66.50 a barrel. That's a steep drop from about the $74-$75 range the industry had been sitting at prior to the last week.

It's a roughly $8 drop, but it's something that Kirk Edwards, former Permian Basin Petroleum Association Chair, believes needs to be put in perspective.

"Everybody has to realize the oil price is up 100% in the last 12 months so the 65-70 range is incredible for the producer to get right now. A lot of people have hedged these levels for next year so that’s also good for them being able to take advantage of that," Edwards said.

Previous dips could be attributed to foreign oil flooding the market. That's not the case this time.

"You know we're not really seeing the OPEC plus group: OPEC, Saudi Arabia, Russia putting in any more oil in the market. They said they were going to put another 300,000 to 400,000 barrels a day, but I think everything right now is COVID related. Everybody is predicting this new variant to be slowing down business ahead," Edwards said.

Edwards said that the sooner we move past COVID, the better off the oil industry will be.

"I would say the more people that we get vaccinated, the quicker this economy is going to come back, and as far as oil and gas pricing, I see a much better 2022 ahead than even what we had at $65-$70 oil right now. So I’m very optimistic once we get this wave behind us," Edwards said.

Until then, Edwards is expecting what he calls a softening of the economy.

"These traders trade on what they think the immediate effect is going to be, and to me they’re saying the immediate fact is there’s gonna be a softening in the economy as far as the energy being used," Edwards said.

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