The price of oil has steadily climbed higher since reaching historic lows within the last couple of months. Many factors play a role in this, but a notable one is the fact that Russia has committed to cutting its daily supply by roughly ten million barrels. Experts believe this could create a market rebalance in the next couple of months and make investors feel a little better about the oil and gas minerals they own. Here are some other reasons why we could be experiencing a market rebalance in the near future and what it could potentially mean for mineral rights investing.
Demand For Oil And Gas Is Steadily Increasing
The global lockdowns due to the coronavirus pandemic did not help the price of oil and gas minerals since the demand was so low. However, as countries across the world begin easing their lockdown restrictions, the demand is steadily increasing. Combine this increase in demand with the production cuts oil companies have been making and the industry is beginning to see some progress made with the surplus of oil.
Global Production May Continue Declining
The production cuts of oil and gas minerals would eventually be noticeable, and we have reached that point after a couple of months. However, oil companies are not in any hurry to increase their production rates again. The fear of another wave of COVID-19 infections globally is forcing companies to take a more cautious approach to avoid another situation where the supply exceeds the demand by far too much. The global production cuts should continue over the next several months until economies and markets begin returning to what they were before the pandemic began.
What Could Be The New Peak For Demand?
Some experts believe the demand for oil could exceed what it was before the pandemic at some point, but others think it will take much longer or may never reach those levels at all. Worldwide consumption of oil in the year 2019 was about 100 million barrels each day. While that was the average last year, oil and gas minerals experts expect that number to be the peak for demand in the coming years. As companies change their work-from-home policies and vacationers avoid taking as many international trips due to the pandemic, these lifestyle changes could potentially lower the bar for oil consumption.
Eckard Land & Acquisition is dedicated to helping people interested in mineral rights investing make the best decisions for their portfolio. While we have great expertise and knowledge about Oklahoma minerals, we also fully understand the global situation surrounding oil and gas and pass that knowledge to our clients. A market rebalance appears to be a promising scenario, but it’s also one worth keeping a close eye on over the next few months. We are living in very fluid times today, so feel free to contact us at any time if you have any questions or would like expert advice on any topic related to oil and gas minerals.