BISMARCK, N.D. (KFYR) – The oil and gas sector has been focused on recovery since the downturn in production began a year ago.
Oil prices are better now than they have been for a while, but there’s more to the story.
Prices are back up to pre-pandemic levels. This is what producers and industry leaders in North Dakota have been hoping for.
The WTI market price is sitting at about $65 a barrel, which has been unheard of throughout the pandemic. The last time the price was over $60 was in early January of 2020 before COVID-19 reached the United States.
Although higher prices are a welcome sign of recovery for the energy industry, current market levels may not last forever or encourage ramped up production.
The spike is mostly due to a surprisingly welcome decision made by the Organization of the Petroleum Exporting Countries, spearheaded by Saudi Arabia, not to expand their production and allow the global market time to recover.
“The OPEC add was 10% of what was expected, significantly below what was expected. So you saw what happened to oil prices, they rose quite rapidly. And you can even see that already at the gas pump,” said Department of Mineral Resources Director Lynn Helms.
AAA says the average gas price per gallon has increased by 40 cents in just one month. Oil industry leaders said that should be welcomed after a slow year.
“Gasoline in and around $3 a gallon, that’s good for our economy. We’re good with oil going up a little bit more, I think we’re going to need that in this state,” said North Dakota Petroleum Council President Ron Ness.
Although the $65 market price is promising, and the current OPEC+ agreement is looking to maintain prices from $60-$50 a barrel, the spike may not last long or encourage producers to hike up production.
“The market doesn’t think that these are the long-term oil prices,” said Helms.
Helms added prices are more likely to hover around $50 a barrel.
Department of Mineral Resources leaders said that oil companies are not planning on increasing drilling budgets for this year based on the high oil price, but they’re trying to accelerate returning more wells to production and completing duck wells.
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