(Bloomberg) -- Oil companies operating in the central U.S. want oil to average $69 a barrel before they'll substantially expand drilling, according to the Federal Reserve Bank of Kansas City.
That's up from $56 a year earlier, according to a survey of firms released Friday by the Kansas City Fed, which serves all or parts of seven states from Nebraska to New Mexico.
West Texas Intermediate, the U.S. benchmark, has averaged about $66 this year and has risen 17 percent since the end of 2017 amid robust demand and supply disruptions in Canada, Libya, Venezuela and elsewhere. On Friday, oil settled at $71.01 in New York.
According to the survey, expectations about future drilling and business activity by energy companies rose in the second quarter even as capital expenditures declined. About 65 percent of companies said they anticipate a “medium business risk” from higher OPEC production levels.
“Regional energy firms had another good quarter and continue to have strong expectations for future growth,” Chad Wilkerson, an economist at the Kansas City Fed, said in a statement. “However, the prices needed for significant expansion to occur have continued to rise.”
To contact the reporter on this story: Chibuike Oguh in New York at coguh1@bloomberg.net
To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Joe Carroll, Steven Frank
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