US Oil Rig Count Jumps by 8, Largest Increase Since Early August

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In the week ending October 12, 2018, the number of land rigs drilling for oil in the United States totaled 869, an increase of eight compared to the previous week and up by 126 compared with a total of 743 a year ago. Including 193 other land rigs drilling for natural gas and one listed as miscellaneous, there are a total of 1,063 working rigs in the country, up by 11 week over 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.

This week’s total represents the most new rigs put into service since the week of August 10, when 10 new oil rigs were put to work.

West Texas Intermediate (WTI) crude oil for November delivery settled at $70.97 a barrel on Thursday and traded up about 0.2% Friday afternoon at around $71.08 shortly before regular trading closed. WTI is on track to close the week down by more than 4%. Brent crude for December delivery traded at $79.67 a barrel, down about 0.7% for the day.

The natural gas rig count rose by four to 193 this week, and the number of “miscellaneous” rigs fell by one to leave a new total of just one rig. The count for natural gas rigs is now up by eight year over year. Natural gas for November delivery traded down about 1.8% at around $3.17 per million BTUs, up by about five cents compared to last Friday and down more than 5% from its high of around $3.35 for the week.

Crude prices posted a weekly high of around $75 a barrel on Tuesday before dropping to below $71 late Thursday. The U.S. commercial crude oil inventory jumped by 6 million barrels last week, putting downward pressure on crude prices that already had been dropping on concerns that the global economy is going to slow down. Saudi Arabia and Russia are pumping at high rates, and U.S. production rose by to 11.2 million barrels a day last week, further weighing on prices.

Among the states, Baker Hughes reports that Texas added eight rigs this week, New Mexico added three and Louisiana added two, while Colorado and Wyoming each added one. Ohio and Oklahoma each lost one rig.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 489, four more compared with the previous week’s count. The Eagle Ford Basin in south Texas has 77 rigs in operation, down by one week over week, and the Williston Basin (Bakken) in North Dakota and Montana has 52 working rigs, unchanged for the week.

Producers added eight horizontal rigs this week and the count rose to 127, while offshore drillers reported a total of 22 rigs, unchanged from the previous week’s count.