Dallas Fed sees energy sector optimism, with caveats

March 29 (UPI) -- A survey of oil and gas companies by the Federal Reserve Bank of Dallas found uneven enthusiasm about U.S. policies, but revealed general optimism.

A survey of 140 energy firms, of which 78 were in exploration production and the rest were field services companies, found that most respondents viewed the market as supportive of sector activity.

"Almost all respondents can cover operating expenses for existing wells at current prices," the survey results read.

The price for West Texas Intermediate, the U.S. benchmark for the price of oil, averaged $62.72 per barrel during the March 14-22 survey period. Most respondents expected WTI to be $63.07 per barrel by the end of the year. WTI was closer to $64.50 early Thursday.

On the new tax policy that extended permanent breaks to corporations, the Dallas Fed survey found 46 percent of the executives at the companies surveyed expected a "slightly positive impact," while 5 percent expected a negative effect. Most of the oil and gas support firms expected a significant impact, while 36 percent of the total expected no impact at all.

"Uncertainty in steel tariff provisions is leading to uncertainty in cost outlook," the survey results read. "Longer term, the tariff has the potential to impact many facets of the industry and could create additional inflationary pressures while it is in place."

The U.S. Association of Oil Pipe Lines said the government should use caution when considering new tariffs imposed by President Donald Trump because hundreds of millions of dollars could be added to the cost of major pipeline projects like Keystone XL and take jobs out of the U.S. economy.

The International Energy Agency, however, said investments long-term should offset some of the headwinds from new steel tariffs.

On production, the Dallas Fed's survey found output from Texas increased for the sixth quarter in a row. Texas is the No. 1 oil producer in the country and hosts two of the more lucrative shale basins - Eagle Ford and Permian.

Oil production from the Eagle Ford shale will increase marginally by April to 1.3 million barrels per day. Output from the Permian basin could increase 2.6 percent from the March rate of 3.07 million barrels per day.