Companies in the oil and gas industry within the Eleventh District have shown a renewed sense of optimism about their business outlook for the fourth quarter, as indicated by the Federal Reserve Bank of Dallas's recent survey released on Thursday. This positive change is attributed to a reduction in uncertainty and a surge in activity.
The survey highlights that the business activity index, which serves as the broadest measure of conditions for energy firms in the Eleventh District, increased to 6.0 in the fourth quarter, a notable improvement from -5.9 in the previous quarter.
The Eleventh Federal Reserve District encompasses Texas, northern Louisiana, and southern New Mexico. Data for the survey were gathered between December 11 and 19, with responses from 134 energy firms.
The company outlook index also experienced a positive shift in the fourth quarter, soaring by 19 points to 7.1 from -12.1, reflecting mild optimism among firms. Meanwhile, the outlook uncertainty index fell by 26 points, reaching 22.4.
Executives from exploration and production companies reported varied oil and gas production levels in the fourth quarter. The corresponding index dropped to 1.1 from 7.9, and although the natural gas production index remained negative, it improved to -3.5 from -13.3.
The survey further indicated that input costs were relatively stable in the fourth quarter, even as operating conditions weakened. Equipment utilization stayed in negative territory, and operating margins declined at a slower rate. There was a significant drop in the prices received for services index.
Employment levels remained stable, with minimal net hiring noted. Employee hours trended towards zero, while the wages and benefits index saw a slight increase.
Survey participants projected a West Texas Intermediate (WTI) oil price of $71 per barrel by the end of 2025, with estimates ranging from $53 to $100 per barrel. In the longer term, the average expectation for WTI oil prices is $74 per barrel in two years and $80 per barrel in five years.
Additionally, respondents anticipate a Henry Hub natural gas price of $3.19 per million British thermal units (MMBtu) by the end of 2025, with forecasts of $3.63 per MMBtu in two years and $4.16 per MMBtu in five years.
During the survey period, WTI spot prices averaged $70.66 per barrel, while Henry Hub spot prices averaged $3.04 per MMBtu.
The material has been provided by InstaForex Company -
www.instaforex.com
