Dallas Fed Survey Respondents Bearish on Short Term Oil Prices

The latest Dallas Fed Energy Survey has revealed that activity in the oil and gas sector increased slightly in the first quarter of 2025. The survey found that U.S. oil and gas production increased slightly in the first quarter, with the oil production index moving up from 1.1 in the fourth quarter to 5.6 in the first quarter. Meanwhile, the natural gas production index also improved from -3.5 to 4.8.

U.S. oil rig count gained one to 487 according to the latest Baker-Hughes survey, keeping it in the 472-488 rigs range for the 40th consecutive week. Oklahoma and its borders were the most dynamic area in the latest data, with Granite Wash drilling increasing by two w/w to a six-year high of 10 rigs and STACK drilling adding two w/w to 12 rigs. In the Permian Basin, Delaware Basin drilling fell by three w/w to 164 rigs while the Midland Basin rig count was unchanged at 110 rigs and other Permian activity was unchanged at 27 rigs. The US gas rig count fell by one to 100, continuing its long sideways move; it has stayed within six either side of 100 rigs for 48 consecutive weeks.

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However, the company outlook index decreased 12 points to -4.9, suggesting slight pessimism among energy companies, while the outlook uncertainty index jumped 21 points to 43.1. Costs increased at a faster pace relative to Q4 2024, with the input cost index advancing from 23.9 to 30.9 among oilfield services firms while the development costs index increased from 11.5 to 17.1 among E&P firms.

On average, respondents expect a West Texas Intermediate (WTI) oil price of $68 per barrel at year-end 2025, slightly lower than the current price of $69.87 per barrel. However, respondents were more bullish about long-term oil prices, expecting WTI oil price of $74 per barrel two years from now and $82 per barrel five years from now. Respondents also expect a U.S. natural gas price of $3.78 per million British thermal units (MMBtu) at the end of the current year, again slightly lower than the current price of $3.88/MMBtu. However, they expect gas prices to hit $4.30/MMBtu two years from now and $4.83/MMBtu five years from now.

By Alex Kimani for Oilprice.com

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