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Oil Slides After Massive Rig Count Gain

Oil Slides After Massive Rig Count Gain

The number of active oil and gas rigs in the United States increased on Friday by 35 for a total of 694 active rigs, according to oilfield services provider Baker Hughes, which is 57 rigs above the rig count a year ago.

Not surprisingly, most of this week’s gains were in the form of oil rigs, which were up 29, from 522 last week to 551 this week. The number of active oil rigs in the United States is now 41 more than the same week last year.

Gas rigs also saw a bump of 6, from 136 last week to 142 this week, which is 15 above the count for the same week last year. This marks 11 straight increases to the gas rig count.

Last week marked the first decrease in active oil rigs in 12 weeks.

The upward trajectory to the number of active oil rigs follows closely that of higher oil prices, particularly in the Permian basin, which now boasts 281 oil and gas rigs—82 rigs more than the same week last year.

The huge increase in oil rigs this week may lend credence to the fear that U.S. shale may very well undo whatever measures OPEC is undertaking to lift prices out of the early 2016 doldrums.

Last week we looked at a snapshot of the number of active oil and gas rigs by basin a year ago compared to the current week, which showed a shift in activity, most notably away from Eagle Ford to the coveted Permian, which holds an estimated mean of 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids.

This week, the shift is even more pronounced as the Permian continues to gain traction, threatening the Eagle Ford’s prominence. Related: Can Saudi Arabia Survive With Oil Below $60?

(Click to enlarge)

WTI was trading up a hefty 2.32% at $53.33 moments before the data release, with Brent at $55.45, up 2.38%.

By Julianne Geiger for Oilprice.com

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  • Joe on January 20 2017 said:
    Thirty five rigs is a "massive" increase? What's 100 rigs, Gargantuous? Call me when we're back to 1600 rigs.

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