June 28 (UPI) — Respondents to a Federal Reserve Bank of Dallas survey said they expected the U.S. benchmark for the price of oil to be at $65.68 per barrel by year’s end.
The Dallas Fed surveyed representatives from 137 energy firms between June 13 and June 21. Respondents were asked about their expectations about the price for West Texas Intermediate, the U.S. benchmark for the price of oil. Answers ranged from between $50 per barrel and $90 per barrel, with an average expectation of $65.68 by the end of the year.
WTI was trading near $73 per barrel early Thursday, its highest level since November 2014. Crude oil prices have been supported by U.S. sanctions pressures on Iran and chronic production shortages from Venezuela.
WTI was supported this week by huge drains on crude oil inventories in the domestic U.S. market. The United States is exporting more of its own oil, while the sector faces headwinds because production levels are straining what’s available in transit infrastructure.
Survey results from the Dallas Fed found oil and gas production increased for the seventh quarter in a row. The Permian shale basin in Texas is among the most productive in the country.
In its latest drilling productivity report, the U.S. Energy Information Administration expects Permian oil production will average 3.27 million barrels per day in June, a 2.4 percent increase from last month if estimates prove accurate. Daniel Yergin, the vice chairman of consultant group IHS Markit, said the additional barrels from the Permian are about the equivalent of adding another Kuwait to the market.
A broad-based business activity index used by the Dallas Fed, meanwhile, was at its highest level since surveys began in 2016.
“Almost all indexes in the latest survey reflected expansion on a quarterly basis,” it stated.
Higher oil prices mean more capital for companies working in the exploration and production side of the industry. An employment index used by the Dallas Fed was at its highest level since surveys began for exploration and production companies.
General Electric announced Tuesday it was planning to shed its 62.5 percent stake in Baker Hughes, a company that provides services for exploration and production in the energy sector. Consultant firm Wood Mackenzie said the decision is a net positive for Baker Hughes.
On a somewhat negative side, the survey from Dallas Fed showed its hours-worked index for the exploration and production was close to an all-time high, though the wages and benefits index declined. Prices for the services companies like Baker Hughes, meanwhile, increased slightly.