The price of oil price has rebounded big time - just a month after it took an unprecedented plunge briefly below $0.
West Texas Intermediate, a crucial U.S. benchmark that turned heads on April 20 after trading for near negative $40, inched above $30 and hit a two-month high as demand for energy returns from the depths of the coronavirus pandemic. And the price of Brent crude, a global benchmark, is now selling for around $35 a barrel.
The oil industry is hardly out of the woods. Petroleum began the year trading above $60, and fuel prices still are still too low for some U.S. wells to be profitable and for some companies to survive.
Yet oil's rebound from that "Twilight Zone"-esque moment when sellers had to pay buyers to take a barrel off their hands has oil executives and government officials finally breathing a sigh of relief.
"Certainly, it would appear that the market has found a bottom," Chevron chief executive Mike Wirth said last week in an online interview series held in lieu of the annual CERAWeek oil industry conference, which was canceled because of the coronavirus.
President Donald Trump, who has staked his reelection on the economy, is shouting for joy in all-caps on Twitter.
"We see a less pessimistic picture," Fatih Birol, executive director of the International Energy Agency, said in his own CERAWeek interview. "Last month I said at the beginning of April, that month could go down in the history of the oil industry as 'black April.' After that we saw oil prices negative and lots of pressure on stocks everywhere especially on the oil industry - unprecedented pressure. This month is a little better. We see early signs of a gradual rebalancing of the global oil markets."
The coronavirus pandemic is far from over, but a number of economic forces are propping up oil prices.
On the supply side of the oil equation, oil-producing nations part of OPEC have kept their word and are throttling back production in May, according to the analytics firm Rystad Energy. Three members of the international oil cartel - Saudi Arabia, Kuwait and the United Arab Emirates - have said they would enact even deeper cuts for June.
"There was some skepticism that [Saudi Arabia] would actually follow through with the cuts," said Tarun Ajwani, vice president of business development at Validere, an oil and gas software company in Canada.
The U.S. government has little power to force private companies within its borders to turn off the spigot, but they, too, cut are cutting back production. American operators have already announced they are shutting off wells that have would have produced at least 1.2 million barrels per day through in May and June, according to Rystad.
More importantly, demand for energy is returning as many U.S. states begin easing stay-at-home orders that helped drive the price per gallon of gasoline to less than $1 at some pumps.
Motorists were already returning to the roads, with weekly demand for gasoline rebounding by 22 percent over a four-week period in April, according to the gasoline price tracker GasBuddy, though purchases at the pump are still well below 2019 levels. Demand is up even more in Tennessee, South Carolina and Georgia, three states that started easing restrictions last month.
"Sub-$1 gas prices have vaporized," said Patrick De Haan, an oil analyst at GasBuddy.
Don't expect a repeat of prices going below $0 when the oil contract period ends this week.
The contract period for June delivery of West Texas Intermediate closes today. When it ends, whoever holds those agreements is due some number of barrels of oil.
When the contract period was nearing its end at this time last month, the country's oil storage facilities were quickly filling, and many traders with no intention of or ability to actually store oil had to dump them fast, forcing the price down.
"They were really desperate," said Paola Rodriguez-Masiu of Rystad Energy. "They were in a corner."
This time around, oil tankers are lining the coast of Southern California and anchoring in the Gulf of Mexico to help store excess crude. And speculators "learned a hard lesson," Rodriguez said, and are not sitting on as many contracts as the deadline looms.
With the price of oil up, some - but not all - hurt producers see a light at the end of the tunnel.
Tapping shale oil is generally more expensive than extracting other kinds of petroleum reserves, and the U.S. companies specializing in that production are among the hardest hit by the crash in prices. The crude prices breaking above $30 may be a much-needed boon for them.
Kevin Book, a managing director at Clearview Energy Partners, said that some shale oil wells begin to break even around $25. Already two Texas-based shale oil producers, Diamondback Energy and Parsley Energy, told Bloomberg News they needed oil around $30 a barrel to consider bringing back production and starting new wells.
Birol, for one, sees shale oil mounting a comeback "around $40" or more. "Many people around the world are saying that we may well see shale is done forever, " he said. "I don't agree with that."
Still, many other shale oil plays will remain unprofitable unless the price of oil goes even higher than that, Book said, especially if the company in question is saddled with debt, as many shale producers are. "It really depends on where you are," Book said, "and it depends on who you are."
It will still take a while for the energy industry to recover from its deep, coronavirus-inflicted wounds.
The sector has shed a total of 1.3 million jobs in the United States since the beginning of the pandemic, according to an analysis published Monday by BW Research. Around 958,500 of those energy jobs were lost in April alone, a 12 percent drop in employment over the course of the month.