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U.S. CRUDE PRODUCTION
The U.S. Energy Information Administration (EIA) estimates that domestic crude production ticked up to 13.3 million barrels per day (b/d) in April, a continued increase from the recent low of 13.1 million b/d in January. The EIA expects oil production will continue to gradually rise over the year, reaching a record of 13.7 million b/d in December. However, the EIA’s forecast was run before OPEC+ announced production increases that may lower oil prices and lead U.S. producers to cut back on new drilling. 

Activity in the oil and gas sector for Texas and surrounding states grew in the first quarter according to a recent survey from the Federal Reserve Bank of Dallas; 27.1 percent of responding energy executives said business activity increased for their firm during the first quarter of ’25, compared to 23.3 who said it fell. While these results show activity has been positive, executives have become discouraged about the future, with 31.1 percent saying their company’s outlook has gotten worse since the fourth quarter of ‘24, compared to 26.2 who say it has improved. Uncertainty has skyrocketed, especially with the announcement of large-scale tariffs in early April; 60.8 percent of executives reported increased uncertainty in Q1 of ‘25, compared to 38.8 percent reporting increased uncertainty in Q4 of last year.

CRUDE PRICES
West Texas Intermediate (WTI) prices fell to an average $63.54 in April from $68.24 in March following the tariff announcement. The EIA projects that prices will drop at a slower pace for the rest of the year, reaching $57.00 per barrel in December. This forecast does not account for OPEC’s recent announcement of increased production and may underestimate the drop. 

Even a decline to $57 per barrel could meaningfully cut back oil production in Texas. According to the Dallas Fed’s energy survey, the average large oil producer can break-even on an existing well when WTI sells for $31 a barrel and can profitably drill a new well when it sells for $61 or more. Since WTI has already dropped below the $61 mark, large producers (who account for vast majority of production) will likely continue operating existing wells while cutting back on exploration and new drilling. 
Global consumption of oil and other liquid fuels is slightly up year-over-year at 102.6 million b/d in April ’25 compared to 101.9 in April ‘24. The EIA projects consumption will continue growing to hit 105.6 million b/d by year’s end.

NATURAL GAS
U.S. natural gas production increased to 105.2 billion cubic feet per day in April ’25 vs 101.7 billion in April ’24. Domestic natural gas inventories expanded to 2,122 billion cubic feet in April as unexpectedly warm weather meant less gas was needed for heating. The EIA expects natural gas prices will rise from $3.44 per million British Thermal Unit (BTU) in April to $5.04 per million BTUs in December as the U.S. exports more LNG and more gas is needed for electricity during the hot summer months.

Prepared by Greater Houston Partnership Research.

Colin Baker
Manager of Economic Research
Greater Houston Partnership
bakerc@houston.org

Clara Richardson
Research Analyst
Greater Houston Partnership
crichardson@houston.org