Oil and gas executives expect West Texas Intermediate crude to average about $88 a barrel by the end of 2026, down from a spot price near $99 during the survey period, according to the Federal Reserve Bank of Dallas' third-quarter energy survey. Forecasts ranged from $70 to $126 a barrel.
The survey, collected from 16 to 24 September from 125 firms, 83 exploration and production companies and 42 oilfield services firms, also found that 48% of respondents expect it will take more than four quarters for the spread between diesel and crude prices to return to 2025 levels. For gasoline, 36% gave the same answer.
Diesel margins under pressure
Two services firms told the Dallas Fed that high diesel prices are eroding their margins, and that diesel's wider economic impact is only starting to show. Respondents' comments also pointed to geopolitical uncertainty, the Middle East conflict, regulatory unpredictability and pressure on margins.
Executives see Henry Hub natural gas averaging about $3.30 per million British thermal units at year-end, against a spot price of about $3, with forecasts ranging from $2.20 to $8.
Activity slows, spending pulls back
The Dallas Fed's business activity index, where a positive reading means activity is still expanding, fell to 38.8 from 46.1 in the second quarter. The oil production index rose to 20.7 from 15.0 and the natural gas production index rose to 14.8 from 3.7. The employment index rose to 15.2 from 4.7, while the capital spending index fell to 32.8 from 40.9.
Cost pressures eased slightly for services firms: the index for oilfield services input costs fell to 60.4 from 64.4. The supplier delivery time index, which tracks how long it takes suppliers to deliver equipment and materials, rose to 36.2 from 31.7.
Gulf supply seen staying tight
Respondents were split on when Persian Gulf crude exports will return to normal. The largest share, 28%, expects normalization by the end of the second quarter of 2027. Another 19% said the first quarter of 2027, and 21% said 2028 or later.
The Dallas Fed describes the survey as a measure of executive sentiment, not a price forecast. Day-to-day moves in crude markets will keep hinging on Middle East headlines, inventories and demand data in the meantime.
