US Oil Rig Count Surges by 10, Crude Price Dips

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In the week ended May 11, 2018, the number of land rigs drilling for oil in the United States totaled 844, up by 10 compared to the previous week and 132 more compared with a total of 712 a year ago. Including 199 other land rigs drilling for natural gas and two listed as miscellaneous, there are a total of 1,045 working rigs in the country, up by 13 week over week and 160 more than a year ago. The data come from the latest Baker Hughes North American Rotary Rig Count released on Friday afternoon.

West Texas Intermediate (WTI) crude oil for June delivery settled at $71.36 a barrel on Thursday and traded down about 0.5% Friday afternoon at $71.00 shortly before regular trading closed. Brent crude for July delivery traded at $77.39 a barrel.

The natural gas rig count rose by three to 199 this week. The count for natural gas rigs is now up by 27 year over year. Natural gas for June delivery traded flat at around $2.81 per million BTUs, up about eight cents compared to last Friday.

U.S. oil producers have added 29 rigs in the past month, even as production from existing wells continues to increase. The U.S. Energy Information Administration (EIA) reported production totaled 10.7 million barrels in the week ended May 4.

The oil rig count could rise even more as producers calculate the impact of the U.S. withdrawal from the Iran nuclear agreement and an expected drop in Iranian barrels available on the global market. While one might expect prices to fall sharply, the reality is that today’s price decline is quite modest, all things considered. As things stand now, prices are high enough to support more investment and producers do not appear to expect those prices to fall enough to preclude a profit.

Among the states, Baker Hughes reported that Texas had eight more rigs this week, Oklahoma and Colorado each added three, Alaska added two, and two states — Louisiana and West Virginia — added one each. New Mexico has four fewer rigs in the past week and Wyoming lost one rig.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 463, five more compared with the previous week’s count. The Eagle Ford Basin in south Texas has 78 rigs in operation, up by two, and the Williston Basin (Bakken) in North Dakota and Montana now has 57 working rigs, unchanged for the week.

Producers added eight horizontal rigs again this week, and the count rose to 918, while offshore drillers reported a total of 20, up one from last week’s count.