The ebb and flow of crude oil and natural gas prices mark the first contraction of the Oklahoma Energy Index (OEI) in 2014.
A record-setting bout of bitter cold weather that swept through the Midwest and across most of the country early in the year drove demand for natural gas and pushed prices above $6, a five-year high. Warmer weather has pushed those prices down and with them, the energy index.
The index of oil and natural gas industry activity fell using data collected in March to 257.27, a 0.44 percent decrease from the previous month. Year-over-year growth, however, has increased by 5.54 percent.
The energy index is a comprehensive measure of the state’s oil and gas production economy established to track industry growth rates and cycles in one of the country’s most active and vibrant energy-producing states. The OEI is a joint project of the Oklahoma Independent Petroleum Association (OIPA), Bank SNB and the Steven C. Agee Economic Research and Policy Institute.
“While changes in crude oil and natural gas prices are expected due to seasonality, we have continued to see strong momentum in the energy markets across our footprint,” said Chris Mostek, Vice President of Energy Lending for Bank SNB. “In fact, we recently added an energy lender to our team in Dallas to meet the banking needs and provide further insight into the industry activity in the mid-continent region.”
Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said the influence of short-term weather impacts will be gone by May, but positive momentum from the temporary increased prices has been felt in the Oklahoma Energy portfolio, a hypothetical stock portfolio of equity assets from Oklahoma companies that saw a 5 percent increase.
“Oklahoma energy companies have benefited,” Evans said. “The real test of industry strength may come as spring employment and rig activity is realized. Early data trends point to the possibility of a strong Oklahoma oil and gas summer season.”
OIPA President Mike Terry said the small downturn in the energy index is a reminder of the impact commodity prices can have.
“Like farmers and ranchers selling their wheat or cattle, Oklahoma oil and natural gas producers are at the mercy of the market,” Terry said.
