HOUSTON, Jan. 3 (Xinhua) -- Growth in energy sector activity slowed significantly in the fourth quarter of 2018, according to the Dallas Fed Energy Survey on Thursday.
The Dallas Fed conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District which covers the state of Texas, 26 parishes in northern Louisiana, and 18 counties in southern New Mexico.
The Federal Reserve Bank of this District is located in Dallas, about 385 km north of downtown Houston.
According to oil and gas executives responding to the survey, the business activity index - the survey's broadest measure of conditions facing Eleventh District energy firms - remained positive, but barely so, plunging from 43.3 in the third quarter to 2.3 in the fourth.
Readings near zero indicated activity was largely unchanged from the prior quarter, a break from the 10-quarter-long trend of rising activity. The decrease in the fourth-quarter index was driven by both exploration and production (E&P) and oilfield services firms.
Positive readings in the survey generally indicate expansion, while readings below zero suggest contraction.
The survey also showed that oil and gas production increased for the ninth consecutive quarter, but the oil production index moved down from 34.8 in the third quarter to 29.1 in the fourth. Additionally, the natural gas production index fell from 35.5 to 24.8.
Meanwhile, the index for utilization of equipment by oilfield services firms dropped sharply in the fourth quarter, with the corresponding index at 1.6, down 43 points from the third quarter. This suggests utilization rates remained relatively unchanged from the third quarter.
Input costs on the services side increased but at a slower pace as the index declined from 46.6 to 36.7, while the index of prices received for oilfield services fell sharply from 23.2 to zero which suggests prices were unchanged on a quarter-over-quarter basis.
Labor market indexes pointed to moderation in both employment and work hours growth in the fourth quarter, particularly for oilfield services, while wage growth accelerated.
The company outlook index posted its first negative reading since the first quarter of 2016, plunging 57 points to -10.2 in the fourth quarter. This drop was particularly prominent among oilfield services firms, where the company outlook slumped 64 points to -17.2.
The uncertainty index jumped 34 points to 42.4, pointing to heightened uncertainty regarding firms' outlooks. Almost 58 percent of firms reported greater uncertainty.
When asked about expectations for where West Texas Intermediate (WTI) oil prices would be by the end of 2019, the average response was 59.97 U.S. dollars per barrel. This is close to 11 dollars higher than the average spot price during the survey period, which was 49.22 dollars per barrel.
