Though many oil companies had to reduce costs and operations due to low oil prices over the last couple of years, the industry as a whole seems to be bouncing back. Oil has been trading between $40 and $50/barrel this year, and drillers cut almost 20,000 jobs in the US. Domestic oil production is forecast to be 500,000 barrels less at the end of 2016 than where production began at the start of the year, and deepwater drilling has also been limited. Oil giants were forced to slash their annual budgets this year—ConocoPhillips, for example, cut its exploration and production budget by almost 67%, or $10 billion, with shares having fallen to $40, a 49.2% drop from late 2014. However, although capital spending has sharply decreased overall, many multibillion projects are set to emerge within the next couple years, which is good news for oil companies’ bottom line, especially companies with both upstream and downstream operations. With a growing middle class that will require fuels in countries like India and China, as well as collaboration with other oil producers, the industry is optimistic about the next few years, with some industry leaders forecasting a trading range of $50–$60/barrel from 2017 to 2020.

Source: New York Times