Energy Index Signals End of Downturn
Strong gains in crude oil prices and improving investor sentiment toward the state’s publicly traded oil and natural gas companies held the most recent Oklahoma Energy Index steady, signaling the end is near for the economic downturn that has plagued the state’s defining industry for the past 17 months.
The Oklahoma Energy Index saw no change using data collected in May. The index of oil and natural gas industry activity stands at 153.9.
“The increase in oil prices and sixth week of inventory draws have helped stabilize this market in recent weeks,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “However, the recent natural gas price increases are a concern given the high storage levels.”
The average monthly crude oil spot price advanced nearly 15 percent from previous month levels. Price momentum carried into June as spot prices continue to threaten a key $50 per barrel threshold. Improving investor sentiment likewise carried the Oklahoma Energy Portfolio to a 7.5 percent gain for the month, marking a 39 percent gain from the trough established in February. The weakest component of the index continues to be rig activity, as the industry employed five fewer rigs in May than in the month before.
“The underlying trend in the index is consistent with a developing bottom to this cycle, but significant concerns still exist,” said Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute. “A somewhat surprising vote by the U.K. to leave the EU will have an immediate impact on equity and credit markets. Concerns over the implications for global economic growth will temper price gains in energy markets while a flight to safety will see the dollar appreciate, further challenging energy price gains.”
The Energy Index is a comprehensive measure of the state’s oil and natural gas production economy established to track industry growth rates and cycles in one of the country’s most active and vibrant energy-producing states. The OEI is a joint project of the Oklahoma Independent Petroleum Association (OIPA), Bank SNB and the Steven C. Agee Economic Research and Policy Institute.
Contact: Cody Bannister at 405-601-2899