US Oil Rig Count Falls by 2 While Offshore Drillers Add 4 New Rigs

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In the week ending October 5, 2018, the number of land rigs drilling for oil in the United States totaled 861, a drop of two compared to the previous week and up by 113 from a total of 748 a year ago. Including 189 other land rigs drilling for natural gas and two listed as miscellaneous, there are a total of 1,052 working rigs in the country, two fewer over the week and up by 116 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 $74.33 a barrel on Thursday and traded up about 0.7% Friday afternoon at around $74.82 shortly before regular trading closed. WTI was on track to close the week up by around 2%. Brent crude for December delivery traded at $84.76 a barrel, up about 0.2% for the day.

The natural gas rig count stayed steady at 189 this week and as did the count of “miscellaneous” rigs. The count for natural gas rigs is now up by two year over year. Natural gas for November delivery traded down about 1.5% at around $3.12 per million BTUs, up by about 13 cents compared to last Friday and down more than 4% from its high of around $3.25 for the week.

Crude prices jumped higher early Monday and reached nearly $77 per barrel on Wednesday, even after the U.S. stockpile report showed a big gain for the prior week. The weight of a rising 10-year Treasury yield and a slightly weaker dollar, however, pushed prices down beginning Thursday morning. Concerns remain related to supply once Iranian barrels essentially disappear from the market next month. Saudi Arabia and Russia have been, shall we say, somewhat evasive on whether they will boost production enough to make up the lost Iranian barrels.

Among the states, Baker Hughes reports that Oklahoma and New Mexico each added two rigs this week while Kansas and Pennsylvania each added one. Texas lost five rigs, and three states — Alaska, Colorado and North Dakota — each lost one rig.

Continuing transportation constraints in the Permian Basin are slowing down drilling in the country’s most productive region. The Dallas Federal Reserve reported some industry comments earlier this week on the state of the Texas energy industry.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 485, one less compared with the previous week’s count. The Eagle Ford Basin in south Texas has 78 rigs in operation, down by one week over week, and the Williston Basin (Bakken) in North Dakota and Montana has 52 working rigs, also down one for the week.

Producers dropped three horizontal rigs this week and the count fell to 919, while offshore drillers reported a total of 22 rigs, four more than the previous week’s count.