Where Will WTI and Henry Hub Prices Land in the Near and Mid-Term?

As part of the latest Dallas Fed Energy Survey, executives from oil and gas companies have revealed where they expect the West Texas Intermediate (WTI) and Henry Hub natural gas prices to be in the near and mid-term. 

When asked what they expect the WTI crude oil price to be at the end of 2024 in the second quarter Dallas Fed Energy Survey, executives from 135 oil and gas firms gave an average response of $78.66 per barrel. The low forecast in the survey was $62.50 per barrel, the high forecast was $100 per barrel, and the price during the survey was $79.94 per barrel, the survey showed.

When asked what they expect the WTI prices to be in six months, one year, two years, and five years in the survey, executives from 123 oil and gas firms gave average responses of $78 per barrel for the six month mark, $80 per barrel for the year mark, $83 per barrel for the two year mark, and $88 per barrel for the five year mark.

Executives from 133 oil and gas companies gave an average response of $3.01 per million British thermal units (MMBtu) when asked in the survey what they expect the Henry Hub price to be at the end of the year. The low forecast was $1.85 per MMBtu, the high forecast was $4.80 per MMBtu, and the price during the survey was $2.61 per MMBtu, the survey outlined.

Asked what they expect the Henry Hub price to be in six months, one year, two years, and five years in the survey, executives from 116 oil and gas firms gave an average response of $2.93 per MMBtu for the six month mark, $3.15 per MMBtu for the year mark, $3.58 per MMBtu for the two year mark, and $4.28 per MMBtu for the five year mark.

Oil and gas prices were highlighted in a comments section of the latest Dallas Fed Energy Survey, which the survey outlined showed comments from respondents’ completed surveys that had been edited for publication.

“Candidate Trump has promised to lower the price of oil. He may again seek the help of Saudi Arabia to do this. If so, then I will expect a lower oil price and another recession in the U.S. oil patch,” a comment from one exploration and production firm noted, according to the survey.

“Natural gas prices are improving, and therefore cash flow is forecasted to improve. We are seeing more authorization for expenditure for drilling in-fill wells, which had been stalled for the past year or two,” another added.

“WTI crude and Henry Hub natural gas pricing directly affects our business as we are operating existing wells and providing cash flow to investors. The prior quarter saw a significant improvement to Henry Hub natural gas pricing and also a more stable oil market that exceeded expectations at the end of the last quarter for this quarter of pricing,” a separate exploration and production company said, the survey showed.

“Low natural gas prices and increasing consolidation of E&P companies combined with fiscal discipline on their part is leading to a decreased rig count as the second quarter of 2024 plays out,” one oil and gas support services firm said, according to the survey.

Oil and Gas Activity

Activity in the oil and gas sector grew in the second quarter of 2024, according to oil and gas executives responding to the Dallas Fed Energy Survey, the latest survey noted.

“The business activity index, the survey’s broadest measure of the conditions energy firms in the Eleventh District face, increased from 2.0 in the first quarter to 12.5 in the second quarter,” it added.

Oil and gas production was little changed in the second quarter, according to executives at exploration and production firms, the survey stated.

“The oil production index advanced from -4.1in the first quarter to 1.1 in the second quarter. The near-zero reading suggests production was essentially unchanged,” it said.

“Meanwhile, the natural gas production index also turned positive, but barely so, increasing from -17.0 to 2.3,” the survey added.

The survey also noted that costs rose at a slightly faster pace for oilfield services but highlighted that this was at a slower pace for E&P firms.

“Among oilfield services firms, the input cost index increased from 31.2 to 42.2. Among E&P firms, the finding and development costs index declined from 24.2 to 15.7. Meanwhile, the lease operating expenses index declined from 33.7 to 23.6,” the survey said.

The equipment utilization index of oilfield services firms turned positive, according to the survey, which revealed that this increased from -4.2 in the first quarter to 10.9 in the second.

“The operating margin index remained negative but increased from -35.4 to -13.0, suggesting margins declined at a much slower pace. The index of prices received for services was relatively unchanged at -4.4,” the survey stated.

The second quarter Dallas Fed Energy Survey noted that aggregate employment index was little changed at 2.9 in the first quarter.

“While this is the 14th consecutive positive reading for the index, the low-single-digit result suggests slow net hiring,” it added.

“The aggregate employee hours index was largely unchanged at 8.1. Additionally, the aggregate wages and benefits index decreased from 32.8 to 24.0,” it continued.

The survey also stated that the company outlook index was essentially unchanged at 10.0.

“The outlook index was 16.8 for E&P firms compared with -2.1 for services firms, suggesting modest optimism among E&P firms and a neutral outlook among services firms,” it said.

“The overall outlook uncertainty index was unchanged at 24.1, suggesting uncertainty continued to increase on net,” it added.

Source: www.rigzone.com