The agrio feeling in the US oil patch

Hi, from Texas, and welcome to Energy Source.

Today, I will focus on why American oil producers, in large part those here in Texas, will refuse to light the spikes and drill more oil despite the recent price increase due to the conflict of the Middle East. The Star Lone state is critical in the energy world because its largest field, the Permian basin in western Texas, represents 51 percent of the total US oil production.

How is Texas, so the United States.

Before entering that, I would like to alert you about a fascinating episode of The Financial Times’ Behind the money The podcast deepened how the oil merchants correctly called the climbing of the Corta East and sold when the prices of crude oil shot.

The FT Energy Editor, Malcolm Moore, makes a turn this week in the program that explains how oil merchants used social networks and open source intelligence to discover a global war was not as imminent as everyone was afraid. The episode is here.

Thanks for reading – Kristina.

Low crude prices hammering the oil production of the United States and commercial feeling

The recent fight between Israel and Iran did nothing to lift sour mood here in Texas. While oil prices for western Texas Intermediate, the US point of reference, rose to $ 75.14 per barrel, fell less than a week after return where they began in the mid -$ 60s.

Crude oil prices have given more than 15 percent from a maximum of $ 80.04 at the beginning of the year thanks to Donald Trump’s rates, a deceleration in global economic growth and a greater production of OPEP+.

These lower prices are translated into more difficult commercial conditions for energy companies, according to the quarterly energy survey of the Dallas Federal Reserve Bank published yesterday. The commercial activity index, a wide measure of the conditions in the bank’s coverage area, became negative, decreasing from 3.8 in the first quarter to -8.1 in the second.

“It’s hard to imagine how worse DC policies and rhetoric could have been for us [exploration and production] Companies, “wrote a respondent.” The administration promised us a better environment for producers, but they were given a world that has benefited OPEC to the detriment of our national industry. “

Uncertainty is also growing among energy executives, according to the survey. The uncertainty index increased four points to 47.1 for the second quarter.

The Dallas Fed survey, held from June 18 to 26, measures the feelings of the energy companies located in Texas, the South of New Mexico and the Northern Louisiana. The bank’s evaluation region is home to four of the main areas of natural oil and natural gas production, which completely pump more crude than many of the world’s largest oil producers.

During the second quarter, oil and gas production decreased slightly. The oil production index fell to -8.9, below 5.6 in the first quarter. The natural gas index also became negative, falling from 4.8 to -4.5.

“The chaos of the day of liberation and the clowns of rates have harmed the national energy industry,” an executive wrote. “The drill, the baby, the drill will not occur with this level of volatility. Companies will continue to place platforms and [frac] spread “.

Frac propagations are the number of crews that perform active bituminous shale hydraulic fracking.

This year’s raw prices have resulted in less drilling platforms. Almost half of energy executives said they expected to drill less new wells in 2025 than they had planned at the beginning of the year. Among the respondents, 26 percent said they would cut the platforms significantly, while 21 percent reported that they would decrease them slightly.

If prices remain at $ 60 per barrel in the next 12 months, 61 percent of executives responded that oil production of their companies would decrease slightly. About 24 percent said production would remain close to current levels.

But their plans would significantly change if the crude oil prices collapse to $ 50 per barrel and remain there for the next 12 months. About 46 percent of executives said production in their companies would decrease significantly. About 42 percent said production would fall slightly.

“There is constant noise from the administration that says that the objective is the objective of $ 50 per barrel,” wrote an energy executive. “Everyone must understand that $ 50 is not a sustainable price for oil. It must be mid -$ 60.”

Respondents wait on average $ 68 per barrel WTI and a natural gas price of $ 3.66 per million British thermal units at the Henry Hub reference point at the end of the year. (Kristina Shevory)

Power points

• A series of mysterious lapa mines attacks against Petroleros has shaken the world of shipping.

• Trump’s emblematic spending plan reduces support for American mineral production, despite the intensification of competition with China.

• The National Chiefs of the Network affirm that “the problems in an electricity substation in London years before a fire in March that led to the closing of Heathrow Airport for 24 hours were not reported”.

Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Kristina Shevory, Tom Wilson and Malcolm Moore, with the support of the Global Reporteros team of the FT reporters. Communicate with us in energy.source@ft.com and follow us in x in @Fotegy. Put up up to date with the past editions of the newsletter here.