Dallas Fed Executives See Lower Oil Prices Ahead

Energy executives in the Dallas Fed district expect oil prices to drop by year's end due to ongoing conflict in the Middle East. The September survey of energy firms, which encompasses Texas, northern Louisiana, and southern New Mexico, forecasts West Texas Intermediate crude to average $88.38 per barrel at the end of 2026, down from previous estimates but still below the current average price.

Respondents' individual predictions ranged widely, from $70 to $126 per barrel, while longer-term forecasts averaged $79 per barrel two years from now and $82 five years from now. Natural gas prices are also expected to decline, with a forecasted Henry Hub price of $3.29 per million British thermal units at year-end.

Executives pointed to the ongoing conflict in Iran as a major factor influencing their forecasts, with one exploration and production respondent stating that 'its movement correlates with commodity prices.' A warning was issued about potential spikes in natural gas prices if storage deficits persist into winter. The survey's business activity index declined, indicating a slower pace of expansion.