Oil and gas activity in the Dallas Fed’s Eleventh District slipped again in the third quarter, with the headline business activity index at -6.5 versus -8.1 in Q2 as executives pointed to elevated uncertainty and higher costs, according to the latest release on Wednesday of the Dallas Fed’s Energy Survey.
Company outlook deteriorated to -17.6, according to the survey, while production also edged lower. The oil production index held at -8.6 and natural gas at -3.2. Oilfield services weakened, with equipment utilization at -13.0 and prices received for services at -26.1, while operating margins remained deeply negative at -31.8.
Respondents, which included 139 firms surveyed from September 10-18, reported cost pressures above series averages. Finding and development costs rose to 22.0 and lease operating expenses to 36.9. Labor conditions were little changed, with the aggregate employment index improving to -1.5 and hours worked to -3.7, while wages and benefits registered 11.5.
In terms of price expectations, the survey found some slippage. The average West Texas Intermediate (WTI) forecast for year-end 2025 is $63 per barrel, down from $68 last quarter, with a survey price during collection of $63.80. Henry Hub is seen at $3.30 per MMBtu at year-end, rising to $3.94 in two years and $4.50 in five. Data were collected across Texas, northern Louisiana and southern New Mexico.
On average, executives expect WTI at $69 in two years and $77 in five, consistent with a restrained capex stance as the uncertainty index stays elevated at 44.6. Around the publication, crude futures firmed on a U.S. stockpile draw and supply issues, providing a modest tailwind to sentiment. The Dallas Fed set its next survey release for December 17, 2025.
By Tom Kool for Oilprice.com
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