US Oil Rig Count Skyrockets by 26, Crude Price Tumbles Below $59

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In the week ended February 9, 2018, the number of land rigs drilling for oil in the United States totaled 791, up by 26 compared to the previous week and 200 more than a total of 591 a year ago. Including 184 other land rigs drilling for natural gas, there are a total of 975 working rigs in the country, 29 more week over week and up by 234 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 settled at $61.15 a barrel on Thursday and traded down about 3.7% Friday afternoon at $58.89 shortly before regular trading closed.

The natural gas rig count increased by three to 184 this week. The count for natural gas rigs is now up by 36 year over year. Natural gas for March delivery traded down about 4.2% at around $2.59 per million BTUs, down 26 cents since last Friday. Natural gas prices have dropped by more than $0.50 per million BTUs over the past two weeks.

As part of the two-year budget agreement reached in the wee hours of Friday morning and signed later by President Trump, the U.S. will sell a total 100 million barrels from its Strategic Petroleum Reserve (SPR) beginning in 2022 and lasting for seven years. The SPR currently holds 665.1 million barrels, equal to 143 days of oil imports into the country.

The capacity of the SPR is more than 750 million barrels, and the planned withdrawal likely will be partially offset by in-kind barrels that producers substitute for cash payments of federal royalties, primarily from offshore production.

Crude prices have been falling all week as U.S. production rises, and the addition of 26 new oil rigs will increase the downward pressure on prices.

Among the states, Baker Hughes reported Texas added 14 rigs and North Dakota added four, while Louisiana and Mexico each had three more. Kansas and Oklahoma each added one rig in the week. Only Colorado lost a rig during the week.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 437, up by 10 compared with the previous week’s count. The Eagle Ford Basin in south Texas has 69 rigs in operation, up four¬†week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 50 working rigs, also four more for the week.

Producers added 24 new horizontal rigs last week to raise the count to 832, while offshore drillers maintained a count of 16 working rigs.