By mid 2015, oil prices had climbed as high as approximately $105 a barrel. In just a matter of months, the price took a nosedive, hitting as low as the mid $20 range by mid-2016. Due in large part to that drastic drop, oil companies in the U.S. reacted by shutting down oil and natural gas rigs in record numbers. By June of 2016, the number of operational oil rigs had gone from a record of 1,600 (late April 2015) to just above 350.
The volatility of oil and natural gas prices is well documented. For a number of reasons, the world had a front row seat to watch the wildest pricing ride in history. In the process of the drop, oil and gas companies had enormous write-offs as they recorded record losses that amounted to hundreds of billions worldwide. Fortunately, prices found stable ground by the end of 2016.
Today, oil prices seemed to have stabilized at around $50.00 a barrel. With oil prices poised to inch higher, U.S. oil and natural gas concerns are in the mood to reopen oil and natural gas rigs. Over the past 14 weeks, the number of oil rigs has increased by more than 200 to a current level of 688. Likewise, gas rigs have increased to 167.
With the addition of so much more oil activity in the U.S., the price of oil seems to be destabilizing. As of April 22, 2017, the price sat at $49.32 per barrel with continuing downward pressure throughout the world.
From this point forward, it becomes a real balancing act as U.S. firms attempt to create more supply without adversely affecting the market. With the threat of war on so many fronts, the global economic system is already jittery. It won’t take much to topple all the recent gains in oil prices, which is something the wold can ill-afford at this point in time.a