In recent weeks, crude oil prices rose slightly after dropping in April due an ongoing global price war and the novel coronavirus pandemic. Montana’s oil prices are following the trend and could help bolster the state’s revenue.
This month, Montana’s small petroleum industry follows the nation’s modest recovery in oil prices as the world reopens its borders locally and globally.
U.S. crude oil, which in April was selling in the negatives for the first time ever, rebounded this month.
Williston Sweet in eastern Montana dropped to roughly negative $47.00 in April and rose to around positive $30 dollars per barrel in recent weeks. For comparison, in June last year Williston Sweet was selling in the $40-range per barrel.
Member-based Montana Petroleum Association executive director Alan Olson says demand has increased as travel restrictions put in place to limit the spread of the coronavirus lift.
He adds low demand and bottomed out prices led companies to decrease production.
“With the low price, a lot of wells were shut in, drilling has slowed down to a crawl," Olson says.
He says that forces inventory stocks down and in turn drives prices back up.
A June report from the U.S. Energy Information Administration points to a coronavirus-induced oversupply and under demand as responsible for historically low oil prices. It writes that the worldwide crude oil market is returning to normal sooner than predicted due to the recovery in demand and cut to oil production.
A profitable oil industry is good news for the Montana economy, according to Mark Haggerty with Bozeman-based Headwaters Economics.
“It’s more than six percent of the state’s general fund budget, so the revenue is really the most important part of the continuing oil production that we have, and a significant portion of that goes back to the local governments," Haggerty says.
A representative from the Montana Board of Oil and Gas Conservation says the state will have a better idea of April and May oil production numbers when reports for those months come in. It’s possible for wells to reopen if demand rises.
