In the week ending September 28, 2018, the number of land rigs drilling for oil in the United States totaled 863, a three less compared to the previous week and up by 113 compared with a total of 750 a year ago. Including 189 other land rigs drilling for natural gas and two listed as miscellaneous, there are a total of 1,054 working rigs in the country, up by one week over week and 114 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 November delivery settled at $72.12 a barrel on Thursday and traded up about 2.1% Friday afternoon at around $73.60 shortly before regular trading closed. WTI is on track to close the week up by around 2%. Brent crude for November delivery traded at $83.25 a barrel, up about 2.3% for the day.
The natural gas rig count rose by three to 189 this week, and a rig listed as “miscellaneous” was also added. The count for natural gas rigs is now flat year over year. Natural gas for November delivery traded down more than 2% at around $2.99 per million BTUs, up by about a penny compared to last Friday and down nearly 2% from its high of around $3.06 for the week.
Crude prices have traded higher for most of this week based on expected global supply constraints when U.S. sanctions against Iran begin to strangle oil exports from the country. Today’s drop in the oil rig count is likely to continue pushing the price of crude higher in small steps.
Among the states, Baker Hughes reports that Oklahoma added five rigs during the week, while Alaska, Colorado Louisiana and Utah each added one. California, New Mexico and Texas each lost two rigs and Wyoming had one rig fewer.
Continuing transportation constraints in the Permian Basin are slowing down drilling in the country’s most productive region. Transporting oil by train or truck is much more costly than pipeline transportation. The issue will be mitigated somewhat later this year, but pipeline capacity is not expected to meet demand until late next year.
In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 486, down two 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 53 working rigs, also unchanged for the week.
Producers added three horizontal rigs this week and the count rose to 922, while offshore drillers reported a total of 18 rigs, unchanged from the previous week’s count.