DALLAS (1080 KRLD)- The Federal Reserve Bank of Dallas says 82 percent of oil and gas exploration and production companies cut production in the second quarter as COVID-19 led to a reduction in travel. The Dallas Fed surveyed 168 companies.
"The impact of the coronavirus pandemic on the oil and gas industry remains severe and widespread," says Dallas Fed Senior Research Economist Michael Plante.
The survey shows 36% of companies plan to start at least some of their production by the end of June, but 13% say they do not expect to add more production until November or later.
The companies surveyed were asked to predict what price they expect oil to reach by the end of the year. The average was $42.11. Tuesday morning, West Texas Intermediate opened at $40.37.
Of the companies surveyed, the largest percentage, 36 percent, did not expect consumption to return to pre-COVID-19 levels until 2022 or later. An additional five percent do not expect consumption to ever return to previous levels.
"Few respondents expect global oil consumption to return to pre-COVID-19 levels in the immediate future, with only five percent of respondents believing it will be back to normal by November of 2020," Plante says.
With many expecting consumption to remain lower through the end of 2021, 39% of companies did not expect drilling activity to return to previous levels until 2022.
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