Why This Tiny Drop in the Rig Count May Bring at Least Some Concern
Baker Hughes Inc. (NYSE: BHI) released its weekly oil rig count late on Friday, and we have already started seeing some breaks in the growth of the number of rigs. Some oil and gas price watchers will think that number of rigs is statistically not that much different on the surface. Others may look at the count and decide that this could mean a lot for oil and gas industry hiring and how sensitive oil executives are to expanding their drilling efforts at current energy prices.
Friday’s total rig count in the United States was down by two to 506. The count from the prior week was up by 11 and the week before was up by eight rigs. Of this two rig drop, the numbers are skewed to gas losing rigs and a very slight gain for oil rigs. The total number of U.S. oil rigs was up two to 416. U.S. gas rigs were down by three to 89. Baker Hughes also said that miscellaneous rigs were down one to one.
What matters is that rig counts generally have risen for about three months now. Another point, and one that highlights just how soft the oil and gas sector remains, is that the total U.S. rig count is down by 336 rigs from a year ago, when the count was 842 rigs. Versus a year ago, oil rigs are down by 228, gas rigs are down by 109 and the miscellaneous category of rigs is up one.
And offshore (U.S.), the number of active rigs is 20. That is up two rigs from last week but is down 11 rigs year over year.
Baker Hughes’ rig count in Canada was down by two to 132 rigs from the prior week:
- Oil rigs up one to 75
- Gas rigs down three to 56
- Miscellaneous rigs unchanged at one
Canadian rig count is down 50 rigs from last year’s count of 182, as follows:
- Oil rigs up five
- Gas rigs down 56
- Miscellaneous rigs up one
The good news is that the drop in rigs appears to be from gas more than from oil. The bad news, at least for workers in the oil patch and in energy, is that the number of rigs is growing very slowly and oil’s recovery has run into headwinds each time oil looks like it wants to try for $50 per barrel again.
Crude closed at $43.62 on Friday, after peaking just above $48.00 earlier in September.