The latest Dallas Fed Energy Survey, conducted from December 3 to 11, reveals the price expectations and planning assumptions of 131 oil and gas executives from exploration and production (E&P) and oilfield services firms. On average, respondents expect the West Texas Intermediate (WTI) oil benchmark to reach $62 per barrel by the end of 2026, with a wide forecast range of $50 to $82. However, for their 2026 capital expenditure planning, they are using a more conservative average price assumption of $59 per barrel. Longer-term, executives foresee WTI at $69 per barrel in two years and $75 per barrel in five years.

Natural Gas Price Outlook

Respondents expressed greater optimism for natural gas prices. They forecast the Henry Hub benchmark to rise to $4.19 per million British thermal units (MMBtu) by the end of 2026, up from an expected $3.79/MMBtu in November 2025. Further out, prices are anticipated to reach $4.57/MMBtu in two years and $5/MMBtu in five years. During the survey period, spot prices averaged $59 per barrel for WTI and $4.84/MMBtu for Henry Hub.

Capital Spending and Employment Forecasts

Capital spending intentions for 2026 vary by company size and type. Most large E&P firms (defined as those producing over 10,000 barrels per day) expect to keep spending flat, while smaller producers anticipate slight increases. Across all companies surveyed, 24% expect flat spending, 26% foresee a slight increase, and 11% predict a significant increase. Conversely, 19% anticipate a slight decrease and 20% forecast a significant decrease. Regarding employment, 57% of companies expect headcounts to stay the same in 2026, with 17% forecasting a marginal increase and 17% a slight decrease.

Impact of Artificial Intelligence

The perceived impact of artificial intelligence (AI) on operational break-even costs differs significantly between large and small companies. Among larger players, 38% believe AI could lower their break-even costs by more than $1 per barrel, and 25% see a potential reduction of nearly $2 per barrel. In contrast, 70% of executives at small companies said AI would have no effect on their break-evens. One commenter noted that AI contributes to lower effective well costs through broad productivity gains, such as faster task completion and improved document review, rather than a single measurable dollar impact.

Executive Sentiment and Anonymous Comments

Anonymous comments submitted with the survey reveal a generally pessimistic outlook, consistent with much of 2025. Concerns cited include lower oil prices rendering some wells uneconomic, the potential cessation of drilling in 2026 if conditions do not improve, and data center growth straining power infrastructure, which could lead to higher household electricity and heating costs. One company reported scaling back from three rigs to one, citing uncertainty from Russia-Ukraine negotiations and forecasting a WTI range of $45-$60.

Some positive comments highlighted potential catalysts for 2026, including possible tax breaks from legislation and rising natural gas demand. Another noted that federal energy policies may help reduce production costs, though a separate commenter warned that steel tariffs are causing significant increases in well costs.