NEW YORK, June 15 (UPI) -- The economic outlook for the state of Oklahoma is negative as the revenue stream ebbs as a result of lower oil prices, Moody's Investors Service says.
Moody's said Oklahoma's credit rating was strong as conservative fiscal policies offset a broad contraction in the energy sector.
"The outlook is negative," the ratings agency added.
Oklahoma is one of the largest oil producers in the United States, hosting some of the more lucrative shale basins in the country. Last week, oil services company Baker Hughes recorded 58 rigs in service in the state. Rig numbers serve as a loose barometer to gauge the health of the energy sector and, for Oklahoma, the number of rigs in service is 45 percent lower year-on-year.
According to the federal government, Oklahoma in March averaged 407,000 barrels of oil production per day, a decline of 14 percent from the same month in 2015.
A survey last week from the Federal Reserve Bank of Kansas City, which extends coverage to Oklahoma, said economic growth for the state has outperformed North Dakota's, the No. 2 oil producer in the country, but not done as well as Texas, the No. 1 oil producer in the country.
Chad Wilkerson, a vice president for the Oklahoma City branch of the federal reserve bank, said Oklahoma's economy is more closely linked to the oil and gas sector than its peers. Texas has a manufacturing sector that's performing well because it's more independent from energy than Oklahoma's manufacturing sector.
In terms of state tax revenue, the bank said Oklahoma was doing better than some other state oil producers, but all of those states were experiencing a decline to some degree. For unemployment, the state rate increased about 0.5 percent this year, but is still relatively health at 4.5 percent.
Moody's said that, despite the negative outlook, the stronger trends tended to offset the negative pressures from the energy sector.
"We expect reserves to remain healthy through fiscal 2017 despite declining energy production levels and depressed oil prices that have lead to lower state revenues and have begun to seep into the broader economy," it said.