Crude Oil Prices Remain Consistent

In February of 2016 the crude oil prices bottomed out. Then in June the price rose to about 40 dollars per barrel and since then prices have stayed between 40 and 50 dollars a barrel. Industry experts say there are a lot of factors keeping prices where they are

“It’s probably elevated production in Texas and the US that is keeping prices from going much higher than they are right now. That along with generally flat global demand,” said Karr Ingham, a petroleum economist. “What’s keeping them from going lower is that OPEC and the other countries in that agreement have removed a considerable amount of crude oil production from the daily market place.”

While the prices for crude oil has remained steady production across the country and in Texas has ramped up.

“We are producing about 3.5 million barrels a day in Texas, which is about 8 percent above where we were last year at this time,” said Alex Mills, the President of Texas of Alliance of Energy Producers. “About 9.3 million barrels a day nationally, which is again up about 9 percent. Crude oil production continues to be strong.
 

But Mills says that has nothing to do with the amount of rigs, but rather the supply.

“We have had an increase in drilling but recently it has kind of dropped off some,” Mills said. “The drilling rig count as declined in recent months. The reason for that has been there has been some speculation that we may have an over-supply of crude oil.”

When Hurricane Harvey hit the Gulf coast it caused gas prices to rise because refineries had to close but it had little to no effect of the prices of crude oil.

 “The hurricanes did not have much of an impact on production. We were able to store a lot of the crude oil that was being produced at the lease level. To store it while the refineries were down,” Mills said.

“That actually pushed crude oil prices down for a short period of time. Historically hurricanes make prices go higher, but not in this case,” said Ingham.

Ingham said the he expects the prices to remain rather consistent in the near future, even though those in the oil industry would like to see a spike. He also said there is nothing to suggest a change in the supply worldwide but in the last few weeks there have been some hints of possible economy growth globally, which could lead to an increase in demand somewhere down the line.


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