US Oil Rig Count Flat, Price on Track to Close Above $60

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In the week ended December 29, 2017, the number of rigs drilling for oil in the United States totaled 747, unchanged for the second consecutive week and up by 222 compared with a total of 525 a year ago. Including 182 other rigs drilling for natural gas, there are a total of 929 working rigs in the country, down week over week by two and up by 271 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 February delivery settled at $59.84 a barrel on Thursday and traded up about 0.9% Friday afternoon at $60.37 shortly before the close of regular trading.

The natural gas rig count fell by two to 182 this week. The count for natural gas rigs is now up by 50 year over year. Natural gas for February delivery traded up about 1.5% at around $2.96 per million BTUs before the count was released and was essentially unchanged following the report’s release.

In an earlier story today, we noted a report from the Dallas Fed that expected the average price of a barrel of WTI crude to close the year right around $50, even though it is trading around $60 today. If, as seems likely, WTI closes above $60 a barrel, we should expect to see more producers hedging their 2018 production and soaking up some of the speculative long positions that currently outnumber short positions by about nine to one.

Among the states, Colorado and Ohio each added one rig. Texas and North Dakota each lost two rigs this week and Utah lost one.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 398, unchanged compared with the previous week’s count. The Eagle Ford Basin in south Texas has 70 rigs in operation, also unchanged week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 47 working rigs, two fewer for the week.