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Texas oil production drifts lower

Dallas Federal Reserve president says crude oil markets won't balance until possibly 2017.

By Daniel J. Graeber
Texas crude oil production down for the second straight month and parts of the state economy are softening as a result. File photo by Gary C. Caskey/UPI
Texas crude oil production down for the second straight month and parts of the state economy are softening as a result. File photo by Gary C. Caskey/UPI | License Photo

AUSTIN, Texas, Nov. 19 (UPI) -- Preliminary data from a Texas energy regulator show crude oil production in the No. 1 producer in the nation is down for the second straight month.

Data from the Texas Railroad Commission show a full-month preliminary estimate for September at 83,326,908 barrels, down about 8.3 percent from the previous month and the second straight month for a decline.

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Year-on-year, however, the daily production rate of 2.4 million barrels is 10 percent higher than for September 2014.

The U.S. oil sector is faltering under the strain of the long slump in crude oil prices, which are down about 45 percent from this time last year. Texas, however, has shown some resiliency during the downturn, with federal reports showing shale basins in the state among the few expected to record stronger rates of production next month.

Energy companies with headquarters in Texas are nevertheless shedding staff. Robert Steven Kaplan, president of the Dallas Federal Reserve, said the job growth rate in Texas is expected at 1.2 percent this year, far lower than the 3.6 percent growth reported last year.

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The latest survey from the Dallas Federal Reserve said Houston and Fort Worth, areas with a heavy focus on oil and gas, saw job growth weaken, while prospects in other metropolitan areas remain "robust."

The bank in October said much of the state has diversified away from energy. In a Wednesday speech before the University of Houston, Kaplan said solid growth in the service sector was in part what's keeping the state economy out of recession.

On crude oil prices, Kaplan said it may be early 2017 before markets return to a healthy balance between supply and demand.

"Only after that point should demand be sufficient [enough] to begin working down this high level of inventory," he said.

Soft demand is one of the factors contributing to the prolonged slump in crude oil prices.

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