After two years of declining prices and reduced employment, the oil and gas industry in Texas and across the nation appears to be making a comeback.

A recent report by Morgan Stanley stated: “The exploration and production (E&P) outlook is attractive.”

“Energy sentiment has improved from two months ago, as the oil supply and demand balance has tightened and revisions turn positive,” the report continued

“Expectations for U.S. oil production growth have also been tempered, as the U.S. E&P industry faces execution challenges from tighter services markets and also feels investor pressure for improved capital discipline.

“OPEC remains committed to production cuts, with steadily improving (and high) compliance. Simultaneously, global oil demand growth continues to surprise to the upside, and is on trend to continue to significantly exceed the historical average into 2018,” the report stated.

“Investor interest has increased, though many remain unconvinced about the sustainability of the current rally. We believe that fundamentals appear to be the strongest they have been since the start of the downturn and, in our view, capable of underpinning some increase in long-term oil price expectations,” the report stated.

Adding to the optimism is the monthly report of the Texas Petro Index, which shows another month of recovery.

Upstream oil and gas activity in Texas increased into the 10th straight month, according to the Texas Petro Index, which rose to 181.4, 21.4 percent higher than last year.

“Crude oil prices in Texas have been the essence of stability for more than a year,” said Karr Ingham, the economist who created the TPI and updates it monthly, noting that average monthly oil prices in Texas have increased slowly but steadily since dipping to a low of $27.08/bbl in February 2016. “Demand is beginning to show signs of recovery and foreign oil suppliers led by OPEC appear to be committed to maintaining announced production cuts.”

Read more: Oil and Gas Industry Future Looks Attractive