Executive Summary
Oil prices increased over the last twelve months from $37/bbl at January 4, 2016 to $55/bbl at year end. For the last two years companies have postponed exploration activities and cut capital projects to drill new wells. Now that oil prices have settled around $50/bbl, production has increased across the U.S.
As oil prices increased, the number of oil and gas companies filing for bankruptcy declined. Out of the 70 oil and gas companies that filed for bankruptcy in 2016, only 13% of bankruptcies occurred in the fourth quarter.
The price of crude oil is determined by market forces: supply and demand. On pages 1 and 2, world demand and supply is analyzed in order to understand the current pricing environment.
