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Washington — Two-thirds of US oil and natural gas executives surveyed by the Federal Reserve Bank of Dallas in September believe US oil production has peaked.

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Most executives surveyed -- 74% -- also expect OPEC to play a bigger role in determining oil prices ahead, according to the third-quarter survey of 166 energy firms released Sept. 23.

"The global oil suppliers of the world (OPEC, Russia, shale producers) have enough oil to bring to market in the $40-$50/b range," one executive said. "Only the most fit operators and service companies will survive, especially in the US oil patch."

While the Q3 survey showed business activity stabilizing somewhat after a deep contraction in Q2, the responses continue to reveal a troubled industry grappling with weak demand, low prices, a tough investment climate and political uncertainty.

Executives expect WTI oil prices to reach an average of $43.27/b by the end of 2020, up from $42.11/b in the Q2 survey, and Henry Hub natural gas prices to be $2.55/MMBtu by year's end, up from $2.15/MMBtu predicted in Q2.


A broad measure of business activity by oil and gas firms climbed 59.5 points from Q2 to minus 6.6 in Q3, the Dallas Fed said of the survey covering its 11th District, which includes Texas and much of New Mexico and Louisiana.

The Dallas Fed's Q2 oil production index recovered 47.2 points from Q2 to minus 15.4, and its natural gas production index increased 37.7 points to minus 10.1.

Asked what level of oil price would spur new drilling, 43% of executives surveyed said WTI would need to reach $51-$55/b before the rig count started to increase substantially. About 29% said that would only happen at $56-$60/b WTI, while 18% thought prices would need to rise above $60/b.

To spur a sharp increase in well completions, about 36% of respondents said WTI prices would need to rise to $46-$50/b and 28% saying $51-$55/b.

Executives expressed concern about a series of uncertainties for the industry related to the pandemic, the November presidential election and the energy transition away from fossil fuels.

"I have lived through several industry booms and busts, but this one is different," one respondent said. "I am afraid that only large oil companies with diverse sources of capital will survive."