Executives’ average year-end WTI forecast of about $88 sits well below spot near $99, which suggests the industry expects some easing, but the $70 to $126 range shows how uncertain the outlook is. The diesel result is the more notable signal for oil markets: if fuel spreads stay wide for more than a year, refining margins are likely to stay strong and freight and transport costs elevated, even if crude eases. The largest share of respondents also does not expect Persian Gulf crude exports to normalise before the second quarter of 2027, which implies a risk premium could persist in crude. This is a sentiment survey of producers and service firms, so prices will still be driven by Middle East headlines, inventories and demand data.
–
US oil and gas executives expect diesel to stay costly relative to crude for more than a year and do not see Gulf supply returning to normal quickly, even though they expect crude to ease.
Summary:
- In the Dallas Fed’s third-quarter energy survey, 48% of executives said it will take more than four quarters for diesel spreads to return to 2025 levels, against 36% for gasoline.
- The business activity index fell to 38.8 from 46.1, so activity is still expanding but more slowly.
- Executives on average expect WTI at about $88 at the end of 2026, below spot near $99, with forecasts ranging from $70 to $126.
- The largest share of respondents, 28%, expects Persian Gulf crude exports to return to normal by the end of the second quarter of 2027, and 21% said 2028 or later.
- The oil and gas production indexes both rose, while the capital spending index fell to 32.8 from 40.9.
- Respondents flagged geopolitical uncertainty, the Middle East conflict and margin pressure, and two services firms said diesel is eroding margins.
Nearly half of US oil and gas executives expect diesel to stay unusually expensive relative to crude for more than a year, according to the Federal Reserve Bank of Dallas’ third-quarter energy survey. Asked how many quarters it would take for the spread between fuel prices and crude oil prices to return to 2025 levels, 48% of respondents said more than four quarters for diesel, compared with 36% for gasoline.
The survey was collected between 16 and 24 September from 125 firms, 83 of them exploration and production companies and 42 oilfield services firms. The Dallas Fed’s business activity index fell to 38.8 from 46.1 in the second quarter. A positive reading means activity is still expanding, but more slowly than three months earlier. Within that, 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.
On prices, executives on average expect WTI crude at about $88 a barrel at the end of 2026, below the spot price of about $99 during the survey period, although forecasts ranged widely from $70 to $126. They expect Henry Hub natural gas at about $3.30 per million British thermal units at year-end, against spot of about $3, with a range of $2.20 to $8.
Cost and supply pressures were mixed. The index for oilfield services input costs eased to 60.4 from 64.4, while finding and development costs and lease operating expenses for producers were little changed. The supplier delivery time index rose to 36.2 from 31.7, indicating longer delivery times.
The survey also asked when crude exports from the Persian Gulf would return to normal. The largest share of respondents, 28%, said by the end of the second quarter of 2027, while 21% said 2028 or later and 19% said the first quarter of 2027. Respondents’ comments highlighted geopolitical uncertainty, the Middle East conflict, regulatory unpredictability and pressure on margins. Two services firms said high diesel prices are eroding their margins, and that the wider economic impact of diesel is only starting to show.
The survey measures executives’ expectations and sentiment, and is not a forecast of prices. It does, however, show that producers and service firms do not expect fuel markets to settle quickly, even as on average they see crude easing from current levels by the end of the year.
—
This article was written by Eamonn Sheridan at investinglive.com.