Energy

Oil Rig Count Drops by 8, Hedge Funds Dump More Short Contracts

Paul Ausick

Published: April 23, 2016 9:45 am

Last Updated: January 13, 2020 10:24 am

In the week ended April 22, the number of rigs drilling for oil in the United States totaled 343, compared with 351 in the prior week and 703 a year ago. Including 88 other rigs drilling for natural gas, there are a total of 431 working rigs in the country, down nine week over week and down 501 year over year. The data come from the latest Baker Hughes Inc. (NYSE: BHI) North American Rotary Rig Count released on Friday.

West Texas Intermediate (WTI) crude oil for June delivery traded up about 1.3% on Friday to settle at $43.75. The most active contract (the May contract expired on Wednesday) rose 8.3% in the week. The U.S. Energy Information Administration (EIA) reported last Wednesday that crude supplies had increased by 2.1 million barrels in the week ended April 15 and that gasoline supplies had fallen by just 100,000 barrels.

Last Sunday’s meeting of oil-producing nations in Doha was a bust, and should have sent prices falling. That did happen, but only until markets opened on Monday. Following the EIA inventory report on Wednesday, crude spiked to above $44 a barrel.

The price increase is likely due to reports from the EIA and the International Energy Agency (IEA) that production has dropped by 600,000 to 700,000 barrels a day, mostly due to production cuts in the United States. Market speculators (hedge funds) have also continued dumping short contracts and that pushes prices up as well.

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