It was reported recently that Permian Basin drilling permits had topped 900 for a record month indicating that Permian drillers were responding to the latest moves in oil prices. If we go a bit deeper, the story is a bit more interesting. Through the second half of 2021, the oil price averaged about $74/bbl. The news at the time was that monthly OPEC+ production additions were set to flip oil from an undersupplied to an over supplied condition globally. In other words, while prices were strong, the future outlook, depending upon what you believed, was that prices would soften in 2022. During the second half of 2021, drilling permits in Texas averaged about 689/month.
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