In the week ended May 1, the number of rigs drilling for oil in the United States totaled 679, compared with 703 in the prior week and 1,527 a year ago. Including 226 other rigs mostly drilling for natural gas, there are a total of 902 working rigs in the country, down 27 week-over-week and down 949 year-over-year. The data come from the latest Baker Hughes Inc. (NYSE: BHI) North American Rotary Rig Count.

The number of rigs drilling for oil fell by 848 year-over-year and by 24 week-over-week. The natural gas rig count slipped by three week-over-week to a total of 222. The rig count for natural gas rigs is down by 101 year-over-year.

This week we take a look at the offshore rig count in the Gulf of Mexico in a bit more detail. A year ago there were 53 rigs at work in the Gulf, compared with just 33 on Friday. Of those, 23 are oil rigs and 10 are drilling for natural gas. Oil rig count in the Gulf hit a peak of 47 in early September last year, the highest total since early 2001.

Analysts at Rystad Energy said last week that the largest contribution to offshore oilfield services cost are the labor-intensive services like maintenance and operations. which accounted for about 21% of all offshore exploration and production costs in 2014. For the services companies, EBITDA margins in this part of the business are a mere 4%. Engineering, procurement, construction and installation accounts for 17% of all offshore costs, but competition has chopped those costs to the bone and margins there are just 2%.

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According to Rystad’s research, this forces producers to go after the drilling contractors that have enjoyed margins as high as 40%. Drilling accounts for 11% of offshore costs, but a full 4% of that amount is profit. The Offshore Technology Conference begins on Monday in Houston, and we can be pretty sure that the drilling providers are going to be talking about the big squeeze.

Crude prices rose by about 2.3% last week to close at around $59.26 on Friday. The West Texas Intermediate (WTI) price for May delivery peaked on Thursday at just short of $60 a barrel. Crude stockpiles grew by just 1.9 million barrels last week, less than expected as refineries complete maintenance and turnaround and demand for crude picks up.

Hedge funds — under the Managed Money heading in the Commodity Futures Trading Commission (CFTC) Commitments of Traders report — reduced their long positions by about 1,000 contracts last week and added about the same number of short positions. The decreases reflect changes due to the April 28 settlement date. Managed Money holds 339,140 long positions, compared with 81,787 short positions.

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Among the producers themselves, short positions outnumber longs, 392,658 to 221,689, and positions among swaps dealers show 343,487 shorts versus 193,839 longs. Swaps dealers increased their long position by a total of more than 7,700 contracts last week.

The states losing the most rigs last week were Texas (down 13) and Oklahoma (down 7). North Dakota and Wyoming each added one rig last week, the only states to post a weekly gain.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count dropped by eight to bring the total down to 238. The Eagle Ford Basin in south Texas lost five rigs and reports that 110 are working. The Williston Basin (Bakken) in North Dakota and Montana has 80 working rigs, up one from the prior week.

As of Friday, the posted price for Williston Basin sweet crude had risen from $46.44 a barrel in the prior week to $48.44 a barrel, and Williston Basin sour had risen from $41.83 a barrel to $43.83 a barrel. Eagle Ford Light crude sold for $55.75 a barrel, up from $53.75 on the previous Friday, the same price as WTI.

The price of gasoline increased over the week. Saturday morning’s average price in the United States is $2.598 a gallon, up about 3.7% from $2.506 a week ago.

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