Report Views Economic, Fiscal Improvement in U.S. Oil States

The economic downturn that befell U.S. oil producing states in mid-2014 began leveling off in 2017 and growth returned, writes S&P Global Platts in a report published in late February 2018. Titled “Strain Begins to Ease for U.S. Oil-Producing States,” the ratings consultancy says it expects the eight major oil states to continue to show fiscal and economic improvement this year.

“Stabilizing economic performance combined with a range of fiscal adjustments implemented in these states has brought about an easing of the negative pressure on the credit quality they were experiencing,” said credit analyst Gabriel Petek. “Consistent with our long-held view, outsized budget reserves in most of the oil-producing states appear to have provided an effective fiscal cushion as they transitioned to lower oil prices.”

Throughout 2017, there was a confluence of developments supporting higher oil prices, and that is likely to continue this year. These include the continuation of OPEC and non-OPEC production cuts, ongoing supply disruptions, globally synchronized growth portending solid demand, reported declines in crude inventory levels, and a weakening U.S. dollar.