Dallas Fed Survey Reveals Mild Optimism Among Energy Firms

(RTTNews) - Companies in the oil and gas sector in the Eleventh District turned optimistic regarding their business prospects in the fourth quarter as uncertainty over the outlook declined and activity increased, results of a survey by the Federal Reserve Bank of Dallas showed on Thursday.

The business activity index, the quarterly survey's broadest measure of the conditions energy firms face in the Eleventh District, rose to 6.0 in the fourth quarter from -5.9 in the third quarter, the Dallas Fed Energy Survey revealed.

The Eleventh Federal Reserve District consists of Texas, northern Louisiana and southern New Mexico.

The survey data were collected from December 11 to 19, and 134 energy firms responded.

The company outlook index of the survey also turned positive in the fourth quarter, gaining a massive 19 points 7.1 from -12.1. This suggested mild optimism among firms. The outlook uncertainty index shed 26 points to 22.4.

Executives at exploration and productions firms reported mixed oil and gas production in the fourth quarter, the survey said. The corresponding index declined to 1.1 from 7.9. The natural gas production index remained in negative territory but improved to -3.5 from -13.3.

The survey also showed that input costs were relatively unchanged in the fourth quarter, while operating conditions weakened. Equipment utilization remained in the negative territory and operating margins declined at a slower pace. There was a steep deterioration in the prices received for services index.

Employment was relative unchanged with little net hiring, the survey said. Employee hours moved up to zero, while the wages and benefits index ticked higher.

Survey respondents expect a West Texas Intermediate (WTI) oil price of $71 per barrel at year-end 2025 with responses ranging from $53 to $100 per barrel.

In the longer-term, respondents on average expect a WTI oil price of $74 per barrel two years from now and $80 per barrel five years from now.

Survey participants expect a Henry Hub natural gas price of $3.19 per million British thermal units (MMBtu) at year-end 2025 and, of $3.63 per MMBtu two years from now and $4.16 per MMBtu five years from now.

WTI spot prices averaged $70.66 per barrel during the survey collection period, and Henry Hub spot prices averaged $3.04 per MMBtu.