In the week ended February 3, 2017, the number of rigs drilling for oil in the United States totaled 583 up by a 17 compared with the prior week and up 116 compared with a total of 467 a year ago. Including 145 other rigs drilling for natural gas and one rig listed as “miscellaneous,” there are a total of 729 working rigs in the country, up by 17 week over week and up by 158 year over year. The data come from the latest Baker Hughes North American Rotary Rig Count released on Friday.

West Texas Intermediate (WTI) crude oil for March delivery traded up 0.5% on Friday to settle at $53.83. Crude prices increased by about 1.2% week over week.

The U.S. Energy Information Administration (EIA) reported last Wednesday that crude supplies had increased by 6.5 million barrels in the week ended January 27, and that gasoline supplies had risen by 3.9 million barrels.

Crude prices perked up a little at the end of the week following announcements that the promised production cuts from both OPEC and non-OPEC countries appeared to be happening. A little closer look shows how the cuts are being made.

OPEC members have chopped about 840,000 barrels a day from production, according to a report at Bloomberg News. Saudi Arabia accounted for 500,000 of those barrels, and the United Arab Emirates and Kuwait combined to cut another 310,000 barrels. The other seven OPEC members have contributed relatively little.

The January production cut represents about 83% of the 1.2 million daily barrels that OPEC had agreed to remove from production on average for the first six months of this year. Russia, the other big producer that has agreed to a 300,000 barrel daily reduction, cut its production by about 117,000 barrels a day in January.

How long will Saudi Arabia be willing to take one for the team? The country has denied that it is the world’s swing producer, the one that adjusts production to achieve the desired balance between supply and demand. Like it or not, the Saudis have likely adopted that role again.

The natural gas rig count remained unchanged with a total of 145. The count for natural gas rigs is now up by 41 year over year. Natural gas for March delivery closed the week at $3.05 per million BTUs, down 34 cents (more than 10%) on the near-month contract compared with the prior week.

Hedge funds — under the Managed Money heading in the Commodity Futures Trading Commission’s (CFTC’s) weekly Commitments of Traders report — dropped 2,978 short futures and options contracts for WTI crude oil last week, and added 6,009 long contracts. The movement reflects changes as of the January 31 settlement date. Managed money now holds 427,908 long positions compared with 47,981 short positions. Open interest totaled 2,888,128. There were 42 hedge funds with large short positions last week, down three from the prior week.

Among the producers themselves, short positions outnumber longs 703,259 to 432,575. The number of short positions jumped by 26,743 contracts last week, and longs added 22,372 contracts. Positions among swaps dealers show 409,011 short contracts versus 119,425 long positions. Swaps dealers added 15,231 contracts to their short positions last week and added 1,280 contracts to their long positions.

John Kemp at Reuters noted that hedge funds are positioning themselves for the possible implementation of a U.S. border adjustment tax by adding to the long positions in WTI and reducing their long positions in Brent. Futures and options in both WTI and Brent have been rising, but the increase in WTI forwards has been much faster. Between January 10 and January 24, hedge funds added 62 million barrels (62,000 contracts) to their WTI long positions compared with a cut of 6 million barrels to their short positions.

U.S. refineries ran at 88.2% of capacity, a week-over-week decrease of about 100,000 barrels a day. Imports rose by about 480,000 barrels a day, to around 8.3 million barrels a day in the week.

Among the states, Oklahoma added six rigs last week, Texas and New Mexico each added four, and four states — Alaska, Arkansas, Colorado, Wyoming — each added one. Louisiana lost one rig last week.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 294, up four compared with the previous week’s count. The Eagle Ford Basin in south Texas has 56 rigs in operation, up by two week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 37 working rigs, unchanged for the week.

Enterprise Products Partners lists a February 4 posted price of $50.28 per barrel for WTI and $51.73 a barrel for Eagle Ford crude. The price for WTI and Eagle Ford crudes rose by $0.66 a barrel in the week.

The pump price of regular gasoline fell by nearly a penny a gallon week over week. Saturday morning’s average price in the United States was $2.275 a gallon, compared with $2.282 a week ago. The year-ago price was $1.773 a gallon.

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