Oil prices recovery means Texas recovery

HOUSTON, Dec. 16 (UPI) -- A decision by members of the Organization of Petroleum Exporting Countries to trim production in January bodes well for oil-rich Texas, a state economist said.

OPEC, with the help from non-member states, agreed to cap production at around 32.5 million barrels per day starting next month in an effort to correct a market tilted toward the supply side. The decision alone was enough to hold crude oil prices above the $50 mark, after dropping below $30 in early 2016.

Texas, the No. 1 oil producer in the United States, faced economic pressures during the start of the year. Federal Reserve Bank of Dallas economist Keith Phillips said that, toward the end of the year, the weakness has given way to a sense of stability in the energy and manufacturing sectors.

"The outlook for the Texas economy next year is slightly better than the growth that we saw for this year," he said.

Recovery has been slow for Texas, however. Houston hosts the headquarters of several energy companies that were forced to cut payrolls early this year, and a division of BP this week moved out of Houston to Denver. The Dallas bank said, however, there should be a 1.5 percent growth in employment for 2016, an upward revision from a previous estimate of 1.2 percent.

A recent survey from the U.S. Geological Survey found the Wolfcamp shale reserve within the Permian basin in Texas could be the largest oil and gas deposit ever assessed in the country. The Dallas bank found companies tied to the exploration and production side of the energy sector showed contraction, but at a slower pace than previous quarters.

The governor of Oklahoma said recently that OPEC's decision would help lift the energy sector in her state. Phillips took a more cautious approach, but said prospects were generally good.

"Producers in Texas as well as throughout the U.S. are always guarded in their optimism as they want to make sure these cuts actually occur, but I think it's led to the view that oil prices are more likely to increase next year than to decrease," he said.