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The spot price for West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, averaged $76.44 per barrel in December, a dip from $84.37 in November ’22 but up from $71.71 in December ’21, according to the U.S. Energy Information Administration (EIA).
EIA forecasts WTI to average $77.17 per barrel in ’23 and $71.58 in ’24. That’s well above the breakeven point for most exploration activities in Texas. In its March ’22 survey of exploration firms, the Federal Reserve Bank of Dallas found that most firms can profitably drill a well in the southwestern U.S. when crude trades at $56 or above. That value is likely somewhat higher today, however, given the increase in costs since the Dallas Fed conducted the survey.
EIA’s oil price forecast assumes U.S. gross domestic product (GDP) will contract in the first half of ’23 before rebounding in the second half. The agency expects GDP to grow 0.5 percent in ’23 and 1.9 percent in ’24, adjusted for inflation. In both years, increases in household spending drives GDP growth.
Prepared by Greater Houston Partnership Research Department
Patrick Jankowski, CERP
Senior Vice President, Research
The EIA expects WTI to average $77.17 per barrel in '23
Closing price for a barrel of WTI in December '22
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