Oil and gas beginning to show signs of recovery

Longview, Texas (Best Places map)

Oil and natural gas appear to be making a comeback, at least in Texas—the nation's leading producer and consumer—and Louisiana, Ken Hedler reports for the Longview News-Journal in northeast Texas. Texas has seen "more drilling rigs going up, more sales of supplies and more people returning to work. The signs are occurring as the price of crude oil is slowly increasing and largely stabilizing, thanks in part to OPEC's decision in November to cut production beginning in January, industry observers said."

Baker Hughes Inc., an American industrial service company, said "the total number of drilling rigs operating last week was up a dozen from a week before to 768," Hedler writes. "It was the eighth consecutive weekly increase, pushing the total to 288 more than a year ago. The monthly averages also show increases, with Baker Hughes data showing Texas averaged 336 rigs in January, up more than 10 percent from a year ago."

"As a proxy for activity in the sector, rig counts are an important indicator for the drilling industry and its suppliers—and are one of the first indicators to show a recovery is in the works," Hedler writes. Bob Davis Jr., a wholesaler who sells valves and other devices to producers, "said more rigs are going up in West Texas, while much of the newer activity in the Longview area and Louisiana is drilling for natural gas."

"Another barometer showing an industry uptick is the Texas Petro Index, which increased for a second straight month in January to 153.3," Hedler writes. "That was up from an index of 150.6 in December and 148.0 in November. Still, the January figure was about 16 percent less than in January 2016 and about 51 percent lower than the peak index of 313.5 calculated in November 2014."