Oil and gas activities in the United States faced continued growth in the third quarter of 2026. According to the Dallas Federal Reserve report, exploration and production (E&P) companies reported increased production of oil and natural gas despite rising costs and longer delivery times from suppliers.
Growth in Exploration and Production Activities
The business activity index of this survey remained steady at 38.8, down from 46.1 in the second quarter. This indicates continued growth in activities despite a slowdown in pace.
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E&P companies experienced increased production this quarter. The oil production index rose from 15.0 to 20.7, and the natural gas production index increased from 3.7 to 14.8. Additionally, E&P companies have a stronger outlook compared to oilfield service companies, with outlook indices reported at 50.0 and 4.6, respectively.
Cost Pressures and Market Forecast
Cost pressures remain high. The exploration and development cost index reached 41.5, and the operational rental cost index reached 43.9. Among oilfield service companies, the input cost index decreased from 64.4 to 60.4 but remains above its historical average.
Oilfield service activity improved this quarter. The equipment utilization index rose from 31.9 to 41.9, and the operational margin index was reported positive at 37.2. Additionally, employment and working hours for staff across the sector increased.
Supply chain pressures continue, with the supplier delivery time index rising from 31.7 to 36.2. This index reached 43.9, particularly among E&P companies.
Overall, survey participants predict that the price of West Texas Intermediate (WTI) crude oil will average $88 per barrel by the end of 2026, while the average spot price of WTI during the survey period was $98.70 per barrel. WTI prices are expected to reach $79 per barrel in the next two years and $82 per barrel in the next five years.
Managers predict that the price of Henry Hub natural gas will reach $3.29 per million British thermal units (MMBtu) by the end of the year, while the average price during the survey period was $2.97 per MMBtu. The Henry Hub price is expected to reach $3.82 in the next two years and $4.28 per MMBtu in the next five years.
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