US Oil And Gas Production expanded at a faster pace during the third quarter of the year despite still rising costs, the latest Dallas Fed Energy Survey has shown.
Costs have now been on the rise for 11 quarters in a row, the Dallas Fed said, with the situation particularly difficult for oilfield service providers.
Even with rising costs, optimism in the industry increased over the third quarter, likely thanks to rising oil prices, which also probably motivated the increase in production. The optimism was evident in respondents’ input despite expectations of still higher costs next year.
Speaking of prices, the respondents in the Dallas Fed survey forecast a WTI price of $87.91 per barrel on average for the final quarter of the year. This compares with an average price forecast of $77.48 in the previous quarter’s survey edition.
The Energy Transition Affecting US Oil and Gas Production
Asked about what the effects of the energy transition would be on the industry, about a third of respondents said they expected the transition to push the price of oil higher. Another third predicted the transition will push the price of oil significantly higher. Just 9% expect the transition to make oil cheaper.
These expectations suggest highly resilient oil demand in the face of EVs and other electrification efforts that are part of the transition push.
Another interesting take from the survey concerned oil consumption now and in 2050. Some 28% of respondents saw oil consumption in 2050 slightly higher than current levels while 25% saw it as substantially higher. Another 25% saw 2050 oil consumption as slightly lower than current levels and only 8% expected it to be significantly lower than current levels.
Source: Oil Price
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