Oil prices are up more than 30 percent over the past six weeks. Profits from the likes of Exxon Mobil and Shell, while down considerably from a year ago, aren't as bad as predicted.
After months of dire news for the oil and gas industry, recent events are forcing some to ask the question: Could the crude downturn be turning around?
Driving the optimism is the U.S. rig count, said Scott Mitchell, an analyst with the research firm Wood MacKenzie. It is down to just 703 rigs nationwide — its lowest level since 2010, according to the oil field services company Baker Hughes. If that drilling slowdown continues, it will eventually cause U.S. crude production to decline and shrink the gap between supply and demand in the world's oil markets.
Alongside predictions the U.S. won't lift sanctions on Iranian oil as quickly as expected and shifts in the world's currency market, there has been plenty for oil traders to get excited about. West Texas Intermediate, the U.S. benchmark, closed at more than $58 a barrel Thursday. While a long way from the $100-plus prices the industry enjoyed last summer, that's up $15 since March 17.
"We weren't anticipating a rebound until" later in the year, Mitchell said. "It's a pretty strong rebound. The question is: Will it continue? And at what pace?"
Already, the larger companies are showing an ability to bring their spending in line with current crude prices, said Pavel Molchanov, an energy analyst with Raymond James.
For now, most analysts are predicting oil prices will stay close to their current level in the months ahead.
While the world rig count is down, the amount of oil in storage is at near record levels and is expected to come onto the market quickly if prices increase. Most analysts are expecting oil prices of around $65 a barrel by year's end as the slowdown in new projects hits the market.