U.S. oil and gas activity slumped in Q2, Dallas Fed says, pointing to higher steel tariffs

[Data analyzing in commodities energy market: the charts and quotes on display. US WTI crude oil price analysis. Stunning price drop for the last 20 years.]
SlavkoSereda/iStock via Getty Images

U.S. oil and gas activity contracted in Q2, the latest energy survey [https://www.dallasfed.org/research/surveys/des/2025/2502] from the Federal Reserve Bank of Dallas said this week, revealing "slight pessimism" and "elevated uncertainty" among exploration and production companies and oilfield services firms.

The Dallas Fed's business activity index, a measure of market conditions, fell from positive 3.8 in Q1 to negative 8.1 in Q2, the index's lowest reading since 2020.

Many E&P firms are now saying they expect to drill fewer wells throughout 2025 than originally planned, with 26% of executives believing the number of wells they drill this year will "decrease significantly." and 21% saying they will "decrease slightly."

Of the executives surveyed, 61% said their production would drop "slightly" if WTI crude remained at $60/bbl over the next year, but 46% said output would decrease "significantly" if WTI fell to $50/bbl.

In anonymous comments submitted along with the survey, many executives pointed specifically to President Trump's steel tariffs and his administration's repeated insistence on dropping prices as a hindrance to the market.

"The 'Liberation Day' chaos and tariff antics have harmed the domestic energy industry. 'Drill, baby, drill' will not happen with this level of volatility," one E&P company executive said in the survey.

Tariffs have raised tubular costs, and some companies in Texas and Oklahoma have seen a "sharp increase" in electricity costs, according to the comments.

"It's hard to imagine how much worse policies and D.C. rhetoric could have been for U.S. E&P companies," one executive said.

"The current political uncertainty is causing apprehension and concern about small, independent oil and gas companies' economic viability," another executive noted.

On Thursday, crude oil futures settled lower in quiet, range-bound trading ahead of the Fourth of July holiday weekend, ahead of the upcoming OPEC+ meeting which is expected to result in an agreement to raise output by 411,000 bbl/day in August.

In the U.S. earlier this week, a surprise build in crude inventories also highlighted demand concerns in the world's biggest crude consumer, and a private sector survey showed service activity in China, the world's biggest oil importer, expanded in June at its slowest pace in nine months as demand weakened.

On the positive side, U.S. June payrolls came in higher than expected and the unemployment rate fell, although resulting dollar gains could limit crude upside.

Front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for August ended Thursday -0.7% to $67.00/bbl and front-month September Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) closed -0.4% to $68.80/bbl; since the end of last week, Nymex and Brent gained 2.2% and 1.5%, respectively.

U.S. natural gas futures fell going into the long weekend, with the front-month August contract -2.2% on Thursday and down 8.8% for the week to $3.409/MMBtu.

ETFs: (NYSEARCA:USO [https://seekingalpha.com/symbol/USO]), (BNO [https://seekingalpha.com/symbol/BNO]), (NYSEARCA:UCO [https://seekingalpha.com/symbol/UCO]), (SCO [https://seekingalpha.com/symbol/SCO]), (USL [https://seekingalpha.com/symbol/USL]), (DBO [https://seekingalpha.com/symbol/DBO]), (DRIP [https://seekingalpha.com/symbol/DRIP]), (GUSH [https://seekingalpha.com/symbol/GUSH]), (USOI [https://seekingalpha.com/symbol/USOI]), (UNG [https://seekingalpha.com/symbol/UNG]), (BOIL [https://seekingalpha.com/symbol/BOIL]), (KOLD [https://seekingalpha.com/symbol/KOLD]), (UNL [https://seekingalpha.com/symbol/UNL]), (FCG [https://seekingalpha.com/symbol/FCG])

Energy stocks, as represented by the Energy Select Sector SPDR Fund (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE]), finished +2%.

Top 20 gainers in energy and natural resources in the past 5 days: Blue Gold (BGL [https://seekingalpha.com/symbol/BGL]) +435.2%, New Fortress Energy (NFE [https://seekingalpha.com/symbol/NFE]) +72.3%, Solaredge Technologies (SEDG [https://seekingalpha.com/symbol/SEDG]) +37.2%, Sunrun (RUN [https://seekingalpha.com/symbol/RUN]) +35.5%, Fluence Energy (FLNC [https://seekingalpha.com/symbol/FLNC]) +33.5%, Daqo New Energy (DQ [https://seekingalpha.com/symbol/DQ]) +31.2%, Stem (STEM [https://seekingalpha.com/symbol/STEM]) +28.3%, Aemetis (AMTX [https://seekingalpha.com/symbol/AMTX]) +27.5%, Maxeon Solar Technologies (MAXN [https://seekingalpha.com/symbol/MAXN]) +26.6%, Eco Wave Power (WAVE [https://seekingalpha.com/symbol/WAVE]) +26.5%, Green Plains (GPRE [https://seekingalpha.com/symbol/GPRE]) +22.7%, Shoals Technologies (SHLS [https://seekingalpha.com/symbol/SHLS]) +22.5%, Vivopower International (VVPR [https://seekingalpha.com/symbol/VVPR]) +20.3%, Array Technologies (ARRY [https://seekingalpha.com/symbol/ARRY]) +19.8%, First Solar (FSLR [https://seekingalpha.com/symbol/FSLR]) +18.9%, Warrior Met Coal (METC [https://seekingalpha.com/symbol/METC]) +18.6%, Par Pacific (PARR [https://seekingalpha.com/symbol/PARR]) +18.4%, Montauk Renewables (MNTK [https://seekingalpha.com/symbol/MNTK]) +18.3%, Jinkosolar (JKS [https://seekingalpha.com/symbol/JKS]) +17.5%, McEwen Mining (MUX [https://seekingalpha.com/symbol/MUX]) +17%.

Top 10 decliners in energy and natural resources in the past 5 days: Houston American Energy (HUSA [https://seekingalpha.com/symbol/HUSA]) -27.8%, USA Rare Earth (USAR [https://seekingalpha.com/symbol/USAR]) -22%, Robin Energy (RBNE [https://seekingalpha.com/symbol/RBNE]) -16.6%, U.S. Antimony (UAMY [https://seekingalpha.com/symbol/UAMY]) -15.6%, Comstock Resources (CRK [https://seekingalpha.com/symbol/CRK]) -15.4%, Foremost Clean Energy (FMST [https://seekingalpha.com/symbol/FMST]) -13.5%, Infinity Natural Resources (INR [https://seekingalpha.com/symbol/INR]) -13.2%, Geospace Technologies (GEOS [https://seekingalpha.com/symbol/GEOS]) -11.9%, China Natural Resources (CHNR [https://seekingalpha.com/symbol/CHNR]) -11.6%, MP Materials (MP [https://seekingalpha.com/symbol/MP]) -11.5%.

Source: Barchart.com

MORE ON CRUDE OIL

* Macro Insights From June 2025: Oil & Trade Wars, Market Peaks, & Stagflation Fears [https://seekingalpha.com/article/4798651-macro-insights-from-june-2025-oil-and-trade-wars-market-peaks-and-stagflation-fears]
* Implied Vols Collapse As Stocks Hit New Record High [https://seekingalpha.com/article/4798517-implied-vols-collapse-as-stocks-hit-new-record-high]
* Oil Update - June 2025 [https://seekingalpha.com/article/4798475-oil-update-june-2025]