US Oil Rig Count Drops by 3, Prices Trying to Hold onto Gains

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In the holiday-shortened week ending November 21, 2018, the number of land rigs drilling for oil in the United States totaled 885, a decline of 3 compared to the prior week and up by 138 compared with a total of 747 a year ago. Including 194 other land rigs drilling for natural gas, there are a total of 1,079 working rigs in the country, down by 3 week over week and up by 156 year over year. The data come from the latest Baker Hughes North American Rotary Rig Count released on Wednesday afternoon.

West Texas Intermediate (WTI) crude oil for January delivery settled at $53.43 a barrel on Tuesday and traded up about 3.5% Wednesday afternoon at around $55.30 shortly before regular trading closes. WTI is on track to close the week down by about 1.5%. Brent crude for January delivery traded at $63.98 a barrel, up about 2.4% for the day.

The natural gas rig count remained unchanged at 194 this week and the number of “miscellaneous” rigs remained at zero. The count for natural gas rigs is now flat year over year. Natural gas for December delivery traded up about 3% at around $4.70 per million BTUs, up by about 50 cents compared to last Friday.

WTI prices dropped more than 6% on Tuesday following reports that OPEC and its partners, primarily Russia, had not agreed on a plan to reduce production in an effort to push prices higher. Slower global economic growth also continues to threaten demand. Wednesday’s recovery limits the weekly drop in crude prices which had been rising on reports that the Saudis and the Russians would agree on further production cuts.

Among the states, Baker Hughes reports that Louisiana added 4 rigs this week and New Mexico added 3 new rigs. Texas and North Dakota each lost 3 rigs while Oklahoma and Wyoming each lost 2. Alaska and Utah dropped 1 rig each this week.

Texas added 3 rigs this week and Pennsylvania added one rig. Oklahoma lost 2 rigs while New Mexico and Ohio each lost one rig.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 493, unchanged compared with the previous week’s count. The Eagle Ford Basin in south Texas has 78 rigs in operation, down by 1 week over week, and the Williston Basin (Bakken) in North Dakota and Montana has 56 working rigs, also down by 1 for the week.

Producers dropped 10 horizontal rigs this week and the count fell to 929 while offshore drillers reported a total of 25 rigs, up by 3 over the previous week’s count.