Energy
Oil Rig Count Rises by 7, Sending Crude Prices Tumbling
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In the week ended July 7, 2017, the number of rigs drilling for oil in the United States totaled 763, up by seven compared with the prior week and up 412 compared with a total of 351 a year ago. Including 189 other rigs drilling for natural gas, there is a total of 952 working rigs in the country, up by 12 week over week and up by 512 year over year. The data come from the latest Baker Hughes North American Rotary Rig Count released Friday.
West Texas Intermediate (WTI) crude oil for August delivery closed up 0.9% on Thursday to settle at $45.52. Crude prices, which had trended lower Friday following Thursday’s EIA report of rising U.S. production, and traded down about 3% after the rig count data were released.
The natural gas rig count increased by five to a total of 189. The count for natural gas rigs is now up by 101 year over year. Natural gas for August delivery traded down about 1% at $2.86 per million BTUs, following a larger-than-expected storage injection reported earlier this morning.
We noted Thursday following the inventory report on crude oil that the futures market for crude oil and refined products apparently has accepted the notion that OPEC will fail to deliver the rebalancing of the market promised by the production cuts of last November. Hedge fund managers have pared their crude oil positions to just two long barrels for every short barrel, among the most bearish position since prices started tumbling in August of 2014.
Even more bearish are hedge funds’ net short positions on gasoline (21 million barrels) and distillates (27 million barrels). In the middle of February, hedge funds had piled up a record net long position of 1 billion barrels of crude oil and products.
Among the states, Alaska and Oklahoma each added four rigs last week, while Louisiana and Texas each added two. New Mexico and Utah each lost a rig last week.
In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 369, down one compared with the previous week’s count. The Eagle Ford Basin in south Texas has 84 rigs in operation, unchanged week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 52 working rigs, also unchanged for the week.
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