Energy Economy

US Oil Rig Count Rises by 7 as Crude Price Remains Steady

In the week ended February 16, 2018, the number of land rigs drilling for oil in the United States totaled 798, up by seven compared to the previous week and 201 higher compared with a total of 597 a year ago. Including 177 other land rigs drilling for natural gas, there are a total of 975 working rigs in the country, unchanged week over week and up by 224 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 $61.34 a barrel on Thursday and traded up about 0.7% Friday afternoon at $61.76 shortly before regular trading closed.

The natural gas rig count decreased by seven to 177 this week. The count for natural gas rigs is now up by 24 year over year. Natural gas for March delivery traded down about 0.8% at around $2.56 per million BTUs, down three cents since last Friday.

Crude oil prices have staged something of a comeback this past week after being knocked down severely when U.S. equity markets were getting torched. Continuing increases in oil rig counts have had little lasting impact on prices, partly because production from the new rigs is still months away.

Between now and then, OPEC continues to express solidarity on maintaining the cartel’s and its partners’ production cuts through the end of this year. Since the beginning of 2017, when the cuts took effect, more than 100 million barrels of crude have been drained from global supplies. But stockpiles remain about 100 million barrels above the five-year average.

If the OPEC-led cuts remain in force too long, prices will rise further and encourage more drilling and production, particularly in U.S. shale plays. The cartel and its allies will have achieved their goal of boosting prices, but it could — and probably will — cost them market share.

Among the states, Baker Hughes reported that Oklahoma had five more rigs last week, Alaska added four and Pennsylvania added three rigs. New Mexico lost three rigs while Louisiana, West Virginia and Ohio lost two each. Colorado and North Dakota each had one fewer rig in the week.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 433, down by four compared with the previous week’s count. The Eagle Ford Basin in south Texas has 70 rigs in operation, up one week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 49 working rigs, one less for the week.

Producers added seven new horizontal rigs last week to raise the count at 839, while offshore drillers added two working rigs to bring the offshore total to 18, one more than last year.