HOUSTON, Dec. 30 (UPI) -- Less than half of oil industry survey respondents expect OPEC to make good on its promise to cut production in 2017, the Federal Reserve Bank of Dallas found.
Starting next week, the Organization of Petroleum Exporting Countries and non-member parties to an agreement like Russia are expected to cut oil production collectively by about what OPEC economists expect in demand growth next year. The move is meant to balance a market that was influenced by oversupply in early 2016.
A survey from the Federal Reserve Bank of Dallas found 58 percent of the respondents believe the agreement will not be enforced. That sentiment has been shared by finance analysts and ministers from OPEC member states like Iran.
On when the market will return to balance, less than half of the respondents expected that to happen by the third quarter of 2017.
Crude oil prices have increased steadily since the OPEC agreement was signed in late November and most of those taking part in the bank's survey said they expected oil prices will be higher one year from now.
On sentiments at home, respondents told surveyors they expected spending in exploration and production to increase in 2017. OPEC's strong production position before the November deal contributed to the supply-side strains that brought oil prices below $30 per barrel and sidelined operations in expensive U.S. shale basins. With prices back above $50 per barrel, more shale producers are returning to work and the Dallas Fed found business activity in the No. 1 oil producer in the nation was ripe for expansion.
"The oil and gas sector is entering 2017 on a positive note, as activity continued growing in the fourth quarter and outlooks improved significantly," Dallas Fed senior economist Michael D. Plante said in a statement.
The Texas energy sector continues to face headwinds. A North American division of BP recently relocated from Houston to Denver and the Dallas Fed said that, while the labor market was strong, most respondents reported static payroll numbers.