The Federal Reserve Bank of Dallas reported on Wednesday that the southern U.S. energy sector activity expanded strongly in the second quarter of 2018.
According to oil and gas executives responding to the Dallas Fed Energy Survey, the business activity index -- the survey's broadest measure of conditions facing Eleventh District energy firms -- rose from 40.7 in the first quarter to 44.5 in the second, the highest level since the survey began in 2016.
The increase was driven by both exploration and production (E&P) and oilfield services firms.
The Dallas Fed conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District.
The Eleventh Federal Reserve District covers the state of Texas, 26 parishes in northern Louisiana, and 18 counties in southern New Mexico. The Federal Reserve Bank of this district is located in Dallas, about 420 km north of downtown Houston.
Positive readings in the survey generally indicate expansion, while readings below zero generally indicate contraction. Almost all indexes in the latest survey reflected expansion on a quarterly basis.
Oil and gas production increased for the seventh quarter in a row, according to executives at E&P firms. The oil production index advanced from 34.3 in the first quarter to 39.0 in the second. Furthermore, the natural gas production index moved up from 25.0 to 33.4. Both indexes are at their highest levels since the survey began.
The company outlook index posted a ninth consecutive positive reading and increased two points to 45.3 in the second quarter.
The index measuring uncertainty regarding firms' outlooks remained in close proximity to zero, suggesting that uncertainty regarding firms' outlooks was mostly unchanged this quarter.
On average, respondents expect West Texas Intermediate (WTI) oil prices to be 65.68 U.S. dollars per barrel by year-end 2018, with responses ranging from 50 to 92 dollars per barrel.
