US Oil Rig Count Drops by 9, Crude on Track for 6% Weekly Gain

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In the week ending August 24, 2018, the number of land rigs drilling for oil in the United States totaled 860, a loss of nine compared to the previous week and up by 101 compared with a total of 759 a year ago. Including 182 other land rigs drilling for natural gas and two listed as miscellaneous, there are a total of 1,044 working rigs in the country, down by 13 week over week and 104 more year over year. The data come from the latest Baker Hughes North American Rotary Rig Count released on Friday afternoon.

West Texas Intermediate (WTI) crude oil for October delivery settled at $67.83 a barrel on Thursday and traded up about 1.7% Friday afternoon at around $69.00 shortly before regular trading closed. WTI is on track to close the week up by around 6%. Brent crude for October delivery traded at $76.00 a barrel, also up about 1.7% for the day.

The natural gas rig count dropped by four to come in at 182 this week. The count for natural gas rigs is now two more year over year. Natural gas for October delivery traded down about 1.3% at around $2.92 per million BTUs, down about three cents compared to last Friday.

Demand for distillates (diesel fuel, heating oil) remains high, and even though gasoline demand is down slightly, refineries are running nearly flat out (over 98% last week) to keep up with demand for distillates. The demand for U.S. diesel exports remains strong (up about 6% year over year to 5.37 million barrels a day last week) and demand from U.S. consumers is also strong at nearly 131 million barrels over the course of last week.

Among the states, Baker Hughes reports that Texas added three rigs while no other state showed a gain. Louisiana dropped seven rigs this week, and North Dakota had four fewer. Five states — Alaska, California, New Mexico, Ohio, Pennsylvania — lost one rig each during the week.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 485, down one compared with the previous week’s count. The Eagle Ford Basin in south Texas has 79 rigs in operation, unchanged week over week, and the Williston Basin (Bakken) in North Dakota and Montana has 52 working rigs, four fewer for the week.

Producers dropped three horizontal rigs this week, and the count fell to 919, while offshore drillers reported a total of 16 rigs, three fewer compared with the previous week’s count.

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