US oil industry coming back cautiously | 2017-01-08 |

US oil industry coming back cautiously

AFP     8th January, 2017 07:50:46 printer

US oil industry coming back cautiously

The US oil industry is feeling guarded optimism going into 2017 as it pivots from a brutal two-year slump prompted by crashing crude prices.

As the New Year kicks off, industry insiders describe a tentative recovery, with some low-cost drilling basins starting to pick up even while others remain depressed.

The downturn, among the worst since the 1973 Arab oil embargo, led to bankruptcies, layoffs of hundreds of thousands of workers and a significant pause on the American shale boom.

Energy producers have been cheered by the election of Republican Donald Trump, whose cabinet picks include oil industry allies like climate-change skeptic Scott Pruitt to head the Environmental Protection Agency and ExxonMobil chief executive Rex Tillerson as secretary of state.

"Operators are still being guarded with their money," said Jason McFarland, president of the International Association of Drilling Contractors in Houston.

"But certainly we're seeing a loosening of the grip on investments as the price of oil rises."

- OPEC cuts in question -

Even more important, sentiment got a boost from the November 30 agreement by the Organization of the Petroleum Exporting Countries to cut production to address a supply glut that had threatened to push oil prices back to multi-year lows.

After the OPEC deal, "it is meaningfully different in sentiment," said David Pursell, a managing director at the Houston energy investment bank Tudor, Pickering, Holt & Co.

"Before November 30, this was like the Bataan Death March," he said, referring to the grim outlook in the industry.

Now, "People are cautiously optimistic, which is light years from where we were eight weeks ago."