Direction at the well versus barrels in the tank
The oil-production index in the Dallas Fed’s third-quarter survey rose from 15.0 to 20.7. The natural-gas-output index climbed from 3.7 to 14.8. Among respondents across Texas, northern Louisiana and southern New Mexico, more producers therefore reported expansion than contraction. The 125-company sample cannot tell us how many additional barrels the United States pumped. Direction at the well and volume delivered to storage are different measures.[1]
Oilfield-services firms reported an equipment-utilization index of 41.9, up from 31.9. That is consistent with producers’ reports of rising activity: busier fields can call on more equipment. Yet the utilization index cannot be converted into an output estimate. The productivity of a working rig, time in use and the characteristics of completed wells all matter to physical supply. This survey provides no aggregate barrel effect.[1]
Delivery time is part of the supply calendar
The supplier-delivery-time index rose from 31.7 to 36.2 across firms and reached 43.9 among producers. The oilfield-services input-cost index remained high at 60.4. A busier field can also be a field waiting for parts. A delivery-time index is not a tally of lost barrels. Yet delays in equipment or materials needed to complete and connect a well can lengthen the interval between a producer’s plan and oil reaching the market.[1]
Respondents’ average year-end forecast for West Texas Intermediate crude was 88 dollars a barrel, with answers ranging from 70 dollars to 126 dollars. That spread shows no settled view of the future price. Subsequent production volumes, storage receipts and delivery times offer a firmer way to judge the physical balance. Demand weakness could also move prices; activity in the oilfield alone does not settle the direction of the market.[1]