US Oil Rig Count Up by 2, Prices Claw Back Some Weekly Losses
In the week ending October 26, 2018, the number of land rigs drilling for oil in the United States totaled 875, an increase of two compared to the previous week and up by 138 from a total of 737 a year ago. Including 193 other land rigs drilling for natural gas, there are a total of 1,068 working rigs in the country, one more week over week and up by 159 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 December delivery settled at $67.33 a barrel on Thursday and traded up about 0.4% Friday afternoon at around $67.62 shortly before regular trading closes. WTI is on track to close the week down by around 2.5%. Brent crude for January delivery traded at $77.62 a barrel, up about 1% for the day.
The natural gas rig count fell by one to 193 this week, and the number of “miscellaneous” rigs remained at zero. The count for natural gas rigs is now up by 21 year over year. Natural gas for December delivery traded down about 1.3% at around $3.21 per million BTUs, down by about four cents compared to last Friday and down about 10 cents from its high of around $3.31 for the week.
A month ago oil analyst John Kemp posted a handy checklist to use as a guide to OPEC strategy:
SEVEN STAGES of OPEC – a quick cut-out-and-keep guide:
1) Despair (low prices forever?)
2) Cautious hope (prices start to rise)
3) Boom (prices and revenues surge)
4) Denial (rising prices not our fault)
5) Acceptance (we can and will boost output)
6) Concern (volatility is unhealthy)
7) Regret (uh oh …)
At the time, Kemp said the cartel was positioned at stage 4. Yesterday, Saudi Arabia’s oil minister said in a Saudi TV interview, “We have entered the stage of worrying about this increase,” referring to a production increase the cartel and its friends have agreed to even as they worry about the impact on pricing. This is Kemp’s stage 6. Stay tuned.
Among the states, Baker Hughes reports that Alaska and North Dakota each added two rigs this week while New Mexico and West Virginia added one rig each. Louisiana and Texas each lost three rigs and Colorado lost one rig.
In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 489, down by 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 56 working rigs, four more for the week.
Producers added one horizontal rig this week and the count rose to 927, while offshore drillers reported a total of 18 rigs, one less than the previous week’s count.