Oil industry not dead yet, getting better — Federal Reserve

Energy Wire-01Energy Wire | June 30, 2016 | Nathaniel Gronewold

HOUSTON -- Business conditions for oil and gas companies have gotten slightly better in the second quarter, even though layoffs continued, according to a new industry survey.

Meanwhile, this city's economy still shows strain as the "energy capital of the world" feels the brunt of the oil price crash.

Those results are from the Federal Reserve Bank of Dallas, whose survey released yesterday shows marked improvement in business sentiment as exploration and production companies and their oil field service contractors anxiously look for the bottom to the bust.

An industry business activity index turned positive after falling sharply negative last quarter. Energy companies told the Fed that some operations returned as oil prices held steady at a $50-per-barrel range. Oil production continued to fall, companies said, but at a slower pace than previously, suggesting there may be merit to predictions that the U.S. crude oil output decline could ease or come to a halt altogether this year.

The majority of survey participants see oil prices improving, an indicator that the industry believes the worst of the crude oil bear market may be over.

"Respondents remained bullish on prices," the Dallas Fed reported. "Over 70 percent of firms expect oil will fetch a higher price one year from now, and more than 50 percent expect higher natural gas prices."

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