{"id":33323,"date":"2025-07-02T19:06:14","date_gmt":"2025-07-02T19:06:14","guid":{"rendered":"https:\/\/www.europesays.com\/us\/33323\/"},"modified":"2025-07-02T19:06:14","modified_gmt":"2025-07-02T19:06:14","slug":"uncertainty-lingers-over-oil-gas-sector-despite-fleeting-crude-boost-dallas-fed-says","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/33323\/","title":{"rendered":"Uncertainty lingers over oil, gas sector despite fleeting crude boost, Dallas Fed says"},"content":{"rendered":"

Oil and gas activity contracted in recent months, with the sector hamstrung by geopolitical tensions<\/a> and generalized fears of the unknown, Federal Reserve Bank of Dallas data showed Wednesday.<\/p>\n

The Dallas Fed\u2019s quarterly survey<\/a> \u2015 which polls oil and gas executives at 136 firms across Texas, northern Louisiana and southern New Mexico \u2015 found that crude production dipped during the second quarter, along with employment and employee hours. <\/p>\n

Many of those companies have national and global operations, with Texas housing the prolific Permian Basin<\/a>, which by itself accounts for nearly 40% of domestic crude<\/a> production.<\/p>\n

\u201cConditions deteriorated for companies in the oil and gas sector this quarter, with survey responses pointing to a small decline in overall activity as well as oil and gas production,\u201d according to Michael Plante, an assistant vice president and economist at the Dallas Fed.<\/p>\n

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The business activity index, the Dallas Fed survey\u2019s broadest measure of conditions facing the energy firms, slid to -8.1, compared to the 3.8 reading in the first quarter. Within the same timeframe, uncertainty among respondents jumped 4 points, to 47.1.<\/p>\n

Tariffs have impacted firms, with 75% of executives reporting their cost of drilling and completing a new well increasing, though the bank noted there was a wide range of responses as to how much the cost rose. The most selected response, chosen by 26% of respondents, was that tariffs increased cost by 4% to 6%. <\/p>\n

Despite a temporary rally in prices spurred by the conflict between Israel and Iran<\/a>, the data reflected industry players are still nervous about the longer-term outlook \u2015 and the prospects for oil to remain high enough to make it profitable to keep churning out crude. <\/p>\n

The survey\u2019s oil production index tumbled to -8.9, versus 5.6 in the first quarter of 2025. Meanwhile, the natural gas production index slid from 4.8 to -4.5. During the same time frame, the employment index dropped to -6.6 compared to 0 in Q1.<\/p>\n

Related:Texas Supreme Court rules lease operator owns \u2018produced water\u2019<\/a>\u2018Persistently lower oil prices\u2019<\/p>\n

The United States is the world\u2019s largest producer of oil and gas, but uncertainty over demand has made domestic fossil fuel companies pull back on production, with recent data showing oil producers cutting back on oil and natural gas rigs<\/a>.<\/p>\n

In fact, the Fed\u2019s survey found that almost half of exploration and production firms expect to drill fewer wells in 2025 than they initially planned at the beginning of the year. <\/p>\n

Of those firms, 26% reported they significantly decreased their expectations while another 21% reported only a slight decrease. More than 30% of firms haven\u2019t changed their expectations while 19% increased them.<\/p>\n

\u201cPersistently lower oil prices, the end of large leaps in operating efficiency, and less remaining quality acreage in U.S. shale will stress the capital returns model adopted by operators there,\u201d Morningstar DBRS analysts wrote on Wednesday.<\/p>\n

Related:Ex-Texas governor\u2019s energy firm buys gas turbines for \u2018unprecedented\u2019 Amarillo-based grid<\/a><\/p>\n

And weaker crude prices, which incentivize more production and make it profitable to do so, are keeping producers on the sidelines.<\/p>\n

\u201cWhile most executives expect only a modest impact on production if oil prices were to remain at $60 over the next year, almost half of respondents believe their production would decline significantly if prices were to be $50 per barrel,\u201d Plante said.<\/p>\n

More than half of oil and gas support services executives \u2014 58% \u2014 expect the selling price for their firm\u2019s primary service or product would decline significantly if the price of WTI crude oil were to be $50 over the next year. Another 23% expect their price would decline slightly.<\/p>\n

Firms also expect challenges related to produced water<\/a> management will constrain drilling and completion activity in the Permian Basin at some point over the next five years<\/p>\n

About 42% expect the challenges to cause \u201cslight constraint,\u201d 32% predict a \u201csignificant constraint\u201d and 26% expect no constraints. <\/p>\n

Related:As Israel-Iran conflict roils markets, US oil supply becomes matter of \u2018national security\u2019<\/a><\/p>\n

Companies expect West Texas Intermediate oil to rise to $68 per barrel by the end of 2025, $72 per barrel in 2027 and $77 per barrel by 2030, the survey showed. <\/p>\n

While the end-of-year price per barrel remained about the same, the cost predictions for 2027 and 2030 were considerably lower than last quarter\u2019s estimates.<\/p>\n

U.S. crude prices are currently trading around $66 a barrel, according to data.<\/p>\n

This reporting is part of the Future of North Texas, a community-funded journalism initiative supported by the Commit Partnership, Communities Foundation of Texas, The Dallas Foundation, the Dallas Mavericks, the Dallas Regional Chamber, Deedie Rose, the McCune-Losinger Family Fund, The Meadows Foundation, the Perot Foundation, the United Way of Metropolitan Dallas and the University of Texas at Dallas. The News retains full editorial control of this coverage.<\/p>\n","protected":false},"excerpt":{"rendered":"Oil and gas activity contracted in recent months, with the sector hamstrung by geopolitical tensions and generalized fears…\n","protected":false},"author":3,"featured_media":33324,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5135],"tags":[5229,1596,5495,14055,27812,358,3187,67,586,132,5230,68,2969],"class_list":{"0":"post-33323","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-dallas","8":"tag-america","9":"tag-dallas","10":"tag-energy","11":"tag-future-of-north-texas","12":"tag-future-of-north-texas-energy-environment","13":"tag-texas","14":"tag-tx","15":"tag-united-states","16":"tag-united-states-of-america","17":"tag-unitedstates","18":"tag-unitedstatesofamerica","19":"tag-us","20":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114785208447470490","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/33323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=33323"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/33323\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/33324"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=33323"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=33323"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=33323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}