US Oil Rig Count Falls by 4; Crude Price Strengthens

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In the week ended March 9, 2018, the number of land rigs drilling for oil in the United States totaled 796, down by four compared to the previous week and up by 179 compared with a total of 617 a year ago. Including 188 other land rigs drilling for natural gas, there are a total of 984 working rigs in the country, three more week over week and up by 216 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 April delivery settled at $60.12 a barrel on Thursday and traded up about 2.8% Friday afternoon at $61.78 shortly before regular trading closed.

The natural gas rig count increased by seven to 188 this week. The count for natural gas rigs is now up by 37 year over year. Natural gas for April delivery traded down about 0.8% at around $2.73 per million BTUs, and up two cents since last Friday.

Crude oil prices have been slammed this week, and Friday’s gain is destined to recover only a portion of the loss. The price has been declining partly due to concerns related to the tariffs the president plans to impose and their effect on oil markets.

Traders are also paying close attention to projected U.S. crude production for 2018 and 2019. The U.S. Energy Information Administration (EIA) estimates U.S. crude production will average 10.7 million barrels a day this year, up from 9.3 million barrels in 2017. If that happens, 2018 will surpass the 1970 record annual average production of 9.6 million barrels a day. For 2019, the EIA is forecasting U.S. production to average 11.3 million barrels a day.

Among the states, Baker Hughes reported that Texas added seven rigs last week, North Dakota added three and two states — Colorado and Pennsylvania — added one each.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 436, up by two compared with the previous week’s count. The Eagle Ford Basin in south Texas has 70 rigs in operation, unchanged week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 51 working rigs, three more for the week.

Producers added one new horizontal rig last week to raise the count to 848, while offshore drillers dropped one working rig to bring the offshore total to 13, seven fewer compared to last year’s total of 20 for the same period.