Oil price forecast - April 26

[dan_s]

"The Dallas Fed Survey estimates higher oil prices than the EIA for oil in 2025, $68 per barrel, but it is still down from earlier this year. While oil prices go down, costs continue to increase. According to the Dallas Fed Energy Survey, both finding and development costs and lease operating costs are increasing. Breakeven costs for drilling new wells are climbing and almost parallel with current crude prices today, around $63 per barrel." - Mercer Capital 4-25-2025

Keep in mind that all oil and gas basins are not the same. In the Tier One areas of the Delaware Basin, a sub-basin of the Permian Basin, the breakeven prices are much lower.

For the full year 2025, I am using a WTI oil price of $66.25/bbl. Actual WTI average price in Q1 2025 was slightly over $71/bbl.

“The only certainty right now is uncertainty. With that in mind, we are approaching this economic cycle with heightened capital discipline and a focus on long-term resilience. I don’t believe the tariffs will have a significant effect on drilling and completion plans for 2025, although I would imagine most managers are developing contingency plans for the potential effects of deals (Russia-Ukraine deal, Gaza-Israel-Iran deal) on global crude or natural gas flows. Now, these contingency plans probably have more downside price risk baked in than initial drilling plans did for 2025.” - Mercer Capital

"Given recent market volatility, Diamondback is closely monitoring the macro environment and is actively reviewing its operating plan for the remainder of 2025. Should low commodity prices persist or worsen, Diamondback has the flexibility to reduce activity to maximize free cash flow generation. Additionally, Diamondback believes it can further lower its breakeven oil price through capital and operating cost reductions." - Diamondback Energy Press Release 4-16-2025