PERMIAN BASIN (Nexstar) — OPEC nations agreed to increase production limits imposed on a handful of countries on Sunday and oil production will graduate to 2 million each day by the end of 2021.
The oil rig count has increased in recent weeks and sits significantly higher today than it did one year ago.
What is the reason for the increased rig count? More production.
Unfortunately, the increase in production does not equate to lower gas prices.
Since July 21, 2021, the rig count in the United States has sat at 484. That number is up by five since the previous count on July 9, 2021.
Additionally, the rig count is up 231 from this time in 2020, during the COVID-19 global pandemic. Around this time, production dropped significantly.
So much so, negative oil prices became a reality for the very first time last year. This was due to the high supply and low demand for the product.
There is a bit of good news in all of this. More oil is coming and is being phased between now and the end of 2022. Oil prices are expected to reflect this.
However, the consumer should not expect to see immediate relief at the pump.
Under an agreement with OPEC on Sunday, OPEC nations will up production output each month by 400,000 barrels daily starting in August.
This agreement came after a dispute that saw prices of oil hit record numbers in recent weeks.
As it pertains to oil here in the Permian Basin, prices are slowly returning to levels seen before the pandemic.
Gas prices are still high. According to AAA, the price of a regular gallon of gas is $3.17. A price close to $1 more than last year at this time.
The Associated Press contributed to this report.