The number of oil and gas rigs in the United States was up again this week, with an increase of 27. Active oil rigs in the United States increased by 21, while the number of gas rigs increased by 6.
The 21-rig increase this week represents the highest spike in the number of active oil rigs in the United States since July 2015.
Similar to last week’s Baker Hughes report, the biggest gainer by basin was the coveted Permian, which now boasts 246 oil and gas rigs—up 11 rigs from last week, and 42 more than the same period last year.
OPEC has struggled to find the balance between economic calamity for its oil-dependent members and lifting prices to a level that would see U.S. shale players come back online in droves, undoing whatever supply glut easing efforts on behalf of OPEC, but its efforts may be all for naught.
Traders have been ever watchful of the OPEC deal that was sealed on the 30th of November, and now of the OPEC/non-OPEC meeting scheduled for the 10th of December. But the industry is also keenly aware of the Baker Hughes rig count figures, which serve as a fair metric of how the U.S. oil and gas industry is responding to the current price fluctuations and the OPEC chatter of the day, rather than how the speculators are responding.
Unfortunately for OPEC, the U.S. has been steadily bringing new oil rigs online since late June 2016, well before the Algiers meeting where OPEC agreed to agree on a production cut at a later date, just a few months after the Doha meeting failure.
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The steadily increasing number of active oil rigs in the U.S. at a time when OPEC had failed to agree on a production cut at the Doha meeting may be a sign that oil and gas players in the U.S. are not waiting for OPEC to correct the market, and that they are behaving independently of the once-revered cartel. Related: Trump’s Energy Advisor Hamm: We Are So Much Stronger Than The Saudis
What’s more, since early September, before OPEC laid out the details of an agreement to cap production, the increase in U.S. oil rig count shows a marked ambivalence to the OPEC goings on, gaining a net of 91 oil rigs since 2 September until the count today. Compared to the rigs in operation this time last year, the U.S. has only 26 fewer rigs in operation today.
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A half hour before the data was released, WTI was trading up 1.28 percent at $51.49, with Brent up 0.5 percent at $54.16. Moments after the rig count was released, WTI was holding near steady at $51.42, while Brent remained unchanged.
Last week, the total oil rig count as reported by Baker Hughes stood at 477 rigs—a three-rig increase overall from the week before and representing a 10-month high.
By Julianne Geiger for Oilprice.com
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