Winter Storm Uri caused a lot of production outages across the U.S.'s lower 48 states.
Texas and the Gulf Coast region were hit especially hard because many of the facilities were not winterized for that level of cold weather.
ConocoPhillips experienced outages across all its major basins - Permian, Eagle Ford and Bakken. Nearly a month after the storm passed, the company continued working on restoring its production, according to Helen Currie, chief economist of ConocoPhillips.
"We're making a lot of progress and looking at the situation day-to-day, and bringing production back when infrastructure is ready and it's safe to do so," she said during CERAWeek by IHS Markit.
James Burkhard, vice president of oil markets, energy and mobility at IHS Markit, said he considers how the demand for global oil will unfold in the coming months as "the most important variable for the oil market."
Currie agreed with Burkhard's assessment.
"Coming out of 2020, demand dipped into the low 80s and upper 70s, and now we're back up to around 94 million or 95 million barrels per day, roughly. So compared to 2019 pre-pandemic, we're about 95 percent of where we thought we should be," she said.
Some sectors are particularly helpful in that recovery, like manufacturing and petrochemical, Currie noted.
"Those things are doing very well, helped somewhat by the ecommerce, shopping and shipping that people are doing," she said. "But there's definitely still some room to go to get to a full recovery."
Looking forward, Currie said she and other analysts expect to see a step-up in oil demand in the second half of this year followed by another big step-up going into 2022.
"When we think about a full recovery to 100 million barrels per day on an annual average basis, we're looking more for that to happen in 2022," she said. "The reason for the lag is that there will be a lot of pent-up demand that takes place in the summer, with people looking for travel and vacations and such, and that will help things. But you have to keep in mind, that's only a certain part of the population."
Currie pointed out that last year's COVID-19 shutdowns ended up creating a lot of unemployment and job losses.
"When you look across the globe at unemployment, underemployment and labor force participation rates, labor force participation is down, unemployment and underemployment is high," she said. "The bottom line is, with all the government stimulus programs that are going into place this year, we think it will take another year before we really get back to a full 100-million-barrelper- day kind of market."
The 'ROPEC' factor
Regarding supply trends, Burkhard observed that while the glut of attention is often focused on the U.S., the vast majority of the world's oil is produced outside of the U.S.
"Outside the United States, you have non-U.S. producers OPEC and Russia, or 'ROPEC,' as we typically call them," Currie said. "ROPEC is holding a lot of barrels off the market right now, and everybody's watching carefully for what are they going to do and at what rate are they going to bring those back.
Currie warned that ROPEC has the option of placing a lot of barrels back on the market quickly if they choose to.
"But if they recognize that demand is not quite ready to absorb all of those volumes, they may take a slower pace," she said.
Referring to other non-ROPEC, non-U.S. production, Currie offered a relative "bright spot" to watch for in the coming months.
"You have growth in a number of countries, particularly offshore projects that are already in the process of being developed, and they're economical to continue developing," she concluded. "So we're looking for some amount of growth in the non-ROPEC, non-U.S. production area, but not a lot. It will just be enough to keep production flat from 2019."
