Stronger oil outlook lifts 2027 prospects for midstream

The U.S. Energy Information Administration projects U.S. oil production will reach a record in 2027, increasing about 428 thousand barrels per day versus 2026. The agency also raised its 2026 oil estimate by roughly 100 thousand barrels per day.

Crude futures for 2027 have climbed about $10 a barrel since January, although prices fell after an interim agreement affecting supply in June. The International Energy Agency said full restoration of Middle East shipping and oil infrastructure will take months, leaving short‑term market flows uncertain.

Several large producers kept 2026 capital spending plans unchanged. Chevron and ExxonMobil maintained their 2026 capex guidance, with Chevron management emphasizing “capital and cost discipline no matter what.” EOG Resources, Occidental Petroleum, Permian Resources and Ovintiv also left full‑year spending guidance intact.

Some public companies are increasing activity within existing budgets. Permian Resources raised full‑year 2026 production guidance by about 2% at the midpoint without changing capex, driven by efficiency gains and workovers. EOG shifted capital toward liquids in response to prices. Diamondback Energy raised 2026 capex and lifted full‑year production guidance to more than 520 thousand barrels per day from an initial 500–510 thousand, increasing capex about 4%. ConocoPhillips boosted 2026 capex roughly 2% to add a Permian rig and raise non‑operated spending in the second half of the year. Both Diamondback and ConocoPhillips shares fell on their announcement days.

Smaller and private operators have added rigs in response to higher oil prices. Baker Hughes data show Permian oil rig counts rose from 239 at the end of February to 256 by June 18. Natural gas takeaway from the basin has improved: the West Texas Waha gas benchmark moved into positive territory after months of negative pricing following the startup of a Gulf Coast export pipeline expansion. Additional pipeline capacity from the Blackcomb project and Energy Transfer’s Hugh Brinson system is expected later this year.

A March survey of 34 upstream executives by the Dallas Federal Reserve found about half planned to drill more wells in 2026 than they had intended at the start of the year. Analysts note that many legacy basins, including the DJ and Williston, remain economic after cost reductions, and that drilling in several U.S. shale areas can be profitable at average oil prices near $62 per barrel.

For midstream infrastructure, forecasts point to larger crude and natural gas volumes in 2027 as pipeline constraints ease. Permian natural gas bottlenecks are expected to lessen with new pipeline capacity, supporting higher gas and natural gas liquids flows next year. Through June 18, the Alerian MLP Infrastructure Index was up about 15.2% year‑to‑date and the Alerian Midstream Energy Select Index was up about 22.4% on a total‑return basis, with yields near 7.3% and 4.7%, respectively.

The Energy Information Administration’s revised production forecasts, recent company capital plans, rig count data and pipeline start‑ups were reported in June and reflect conditions through mid‑June.