In 2016, the investment market saw oil prices in the $20 per barrel range. This proved to be a total disaster for investors, the nation’s that are heavily invested in oil production and the oil market in general. While prices have headed up from these low levels, there is still much work to be done and that work has begun on many levels.
Had things Continued as they were going, oil could have dropped below $20 per barrel and, worse yet, it could have very well stayed there for the foreseeable future. However, a few things happened to help bring oil off of it’s record lows. The first is the national reserves or stockpiles of crude oil have slowly begun to draw down. While these stockpiles where often used to moderate oil prices when there was an interruption in production, the existence of these stock piles allowed oil to drop significantly in value, even when these stockpiles remained untapped.
Secondly, certain OPEC nations, most notably Saudi Arabia, recently agreed to cut production. This has allowed the demand for oil to grow which in turn has helped prices creep back into the $50 to $60 price range. While these higher prices haven’t greatly effected gas prices with huge increases, these prices have helped raise market capital to nation providers of oil. For example, Venezuela has been experiencing significant financial troubles from a government standpoint. With higher average prices for a barrel of oil, this has resulted in the government having more capital to help relieve some of the financial issues the country has been facing.
While there is still more work to be done, much of the work is already progressing. With the capitulation of prices and with OPEC restricting production, the price for a barrel of oil is on the rise. Fortunately, this rise hasn’t effected the cost of petroleum products. In addition, as these factors begin working their way through the market, investors stand to reap the rewards. While no one is expecting oil at well over $100 per barrel, given the recent volatility in the crude oil market, modest improvements in the current value of oil could put many investors in the black.