NEW YORK: Oil and gas activity in the US Midwest and Mountain West states declined in the first quarter and is expected to continue to slow, according to a survey released on Friday by the Federal Reserve Bank of Kansas City.

The first quarter’s drilling and business activity index decreased to -13 from 6, according to the survey, which polls energy firms operating in producing states like Colorado, Wyoming, Oklahoma and the northern half of New Mexico.

“Revenues and profits continued to decline significantly and are expected to continue contracting,” said Chad Wilkerson, a senior vice president at the bank.

The results mirror a survey the Federal Reserve Bank of Dallas released last month, which said activity was stalling in the largest US shale field in Texas and oil executives’ outlooks across the region were souring.

US oil prices have been volatile in the past month, swinging from around $64 a barrel in mid-March over concerns of a banking crisis to back over $80 a barrel after OPEC+ announced a surprise production cut effective next month.

West Texas Intermediate (WTI) futures were trading around $82.45 a barrel on Friday, above the $64 a barrel executives said was needed for drilling to be profitable. But the outlook for future drilling and business activity also fell to -13, from 19 in the latest survey.

“A lot of uncertainty with the price of oil. Operators are taking a pause to see how the next 3-4 months play out,” said one unnamed survey respondent. “Drilling for gas isn’t even part of the conversation. We continue to hear from operators that steel/casing cost are still too high with availability limited.” Natural gas was trading around $2.10 per million British thermal unit (mmBtu) on Friday, far below $3.45 per mmBtu needed for drilling to be profitable.


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