Energy Economy

US Oil Rig Count Tumbles by 10, Boosting Prices Already Spurred by OPEC Cuts

Paul Ausick

In the week ending December 7, 2018, the number of land rigs drilling for oil in the United States totaled 877, a drop of 10 compared to the previous week and up by 126 compared with a total of 751 a year ago. Including 198 other land rigs drilling for natural gas, there are a total of 1,075 working rigs in the country, one less than a week ago and up by 144 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 January delivery settled at $51.49 a barrel on Thursday and traded down up about 4.5% Friday afternoon at around $53.82 shortly before regular trading closed. WTI is on track to close the week up by about 3%. Brent crude for February delivery traded at $63.02 a barrel, up about 5% for the day.

The natural gas rig count rose by nine to 198 this week, and the number of “miscellaneous” rigs remained at zero. The count for natural gas rigs is now up by 18 year over year. Natural gas for January delivery traded up more than 5% at around $4.55 per million BTUs, up by about a penny compared to last Friday.

Today’s report on U.S. natural gas in storage combined with expectations for cooler weather in the last half of December has sent natural gas prices soaring. Crude oil prices are up on reports that OPEC and its partners plan to reduce production by 1.2 million barrels a day for six months beginning in January.

Among the states, Baker Hughes reports that five of them added one rig each during the week: Alaska, Kansas, Pennsylvania, Utah and West Virginia. Oklahoma lost three rigs, Ohio and Texas dropped two rigs each, and Louisiana lost one rig.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 489, down by four compared with the previous week’s count. The Eagle Ford Basin in south Texas has 80 rigs in operation, one more week over week, and the Williston Basin (Bakken) in North Dakota and Montana has 56 working rigs, unchanged for the week.

Producers dropped one horizontal rig this week and the count fell to 933, while offshore drillers reported a total of 23 rigs, unchanged from the previous week’s count.