Increase In Economic Activity Key To Oil, Gas Recovery
By Alex Mills
August 13, 2020
The global COVID-19 pandemic has created an incredible economic decline in Texas, the U.S. and throughout the world. However, two new reports this week indicated the possibility of a reversal.
The Energy Information Administration (EIA) stated in its Short-Term Energy Outlook on Tuesday even though there remains a high level of uncertainty in many economic indicators, there is some optimism that economic activity and energy demand has increased.
“EIA expects oil consumption will generally rise through the end of 2021,” the reported stated. Oil demand rose from 17.9 million barrels per day (b/d) to 19.4 million b/d.
EIA estimates global liquid fuels inventories rose 6.4 million barrels b/d during the first half of 2020, but that increase will decline during the last half of the year because of increased activity and a decline in production. In the U.S., crude oil inventories have declined from a record high of 540 million barrels on June 19 to 514 million barrels (5 percent) this week. Global liquid fuels production declined 8.6 million b/d year over year to 91.8 million b/d, and U.S. crude oil production has dropped to 11.3 million b/d from 12.2 million b/d average in 2019.
The second report comes from a survey of 400-plus business owners in Texas by the Federal Reserve Bank of Dallas that believe economic activity will be stronger during the next six months resulting in better earnings. “This optimism, coupled with a downward trend in new COVID-19 infections in Texas in recent weeks, gives hope that a more sure-footed rebound may be on the horizon,” the Dallas fed said….