By Colin Kellaher

Energy activity in the middle of the U.S. plunged again in the second quarter as energy prices remained low, and producers don't expect a rebound any time soon, according to a survey by the Federal Reserve Bank of Kansas City.

The quarterly Tenth District Energy Survey's key index of drilling and business activity came in at minus 61 in the quarter, an improvement from the record low minus 81 reading recorded in the first quarter but indicating continued substantial decreases in activity.

The survey's future drilling and business activity index rebounded sharply to zero from a record low of minus 78 in the first quarter, but it still indicated that energy activity is expected to remain largely unchanged moving forward, as oil and gas prices remain well below the levels producers say will prompt an increase in drilling.

Energy firms surveyed by the bank, on average, said they need to see oil at $51 a barrel and natural gas at $2.88 per million British thermal units before they significantly ramp up drilling, up from $47 and $2.74, respectively, in the prior quarter's survey. The companies indicated that they think it will be more than a year before prices reach those levels.

The price for West Texas Intermediate crude is expected to average $41 a barrel in six months and $47 a barrel in one year, while the average expected Henry Hub natural-gas prices were $2.17 and $2.41 a million Btu, respectively, according to the survey.

WTI futures, the U.S. crude benchmark, were recently up 1.3% to $40.13 a barrel, while natural-gas futures rose 2.7% to $1.83 per million Btu.

The bank said more than 62% of firms surveyed shut-in wells or curtailed production in the second quarter due to low prices, while nearly a third warned that they wouldn't survive a year if current revenue levels persist.

The Kansas City Fed's quarterly survey monitors oil- and gas-related companies located or based in the Tenth District, which includes Colorado, Oklahoma, Wyoming, Nebraska, Kansas, the northern half of New Mexico and the western third of Missouri.

Write to Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

July 10, 2020 13:50 ET (17:50 GMT)