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Oil Rallies As OPEC Production Falls

OPEC’s oil production cuts continued…

Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for US-based Divergente LLC consulting firm, and a member of the Creative Professionals Networking Group.

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Oil Prices Hold Steady As U.S. Oil Rig Count Rises

The number of active oil and gas rigs in the United States was flat this week overall, after gaining 505 rigs in the last 12 months. But on the oil side, the number of rigs still increased—this week by two—while gas rigs decreased by 2 for a net growth of zero. Combined, the total oil and gas rig count in the US now stands at 952 rigs.

Prices rose by mid-day on Friday with Shell’s declaration of a force majeure on Nigeria’s Bonny Light grade, and on yesterday’s IEA report showing a forecast for increased global demand this year. WTI was up .89% at 12:31 pm EST at $46.46—almost $2 above last-week’s levels. The Brent crude benchmark was up .93% at $48.87, also a near-$2 gain per barrel. By 12:59pm, prices were even higher, with both benchmarks trading up over 1% for the day.

During 2017—a year of tumultuous prices that began on January 3, 2017, at $58.30 per barrel for WTI and fell almost $10 to today’s $46.46—the number of US rigs have increased almost 50 percent. Of the 14 major US basins for oil and gas, 7 have seen over a 100 percent increase in the number of active oil and gas rigs. The largest basin—the Permian—has seen a total increase of 213 oil and gas rigs in 2017, bringing the Permian’s 2017 growth to 133 percent overall.

Since the advent of the OPEC agreement, oil rigs in the United States have increased by 288, and have only taken on losses in two weeks out of the 32 weeks since the deal was sealed—a fact that OPEC is finding it increasingly hard to ignore as it considers next steps.

(Click to enlarge)

At 16 minutes after the hour, WTI and Brent prices started to fall and were trading at $46.54 and $48.90 respectively.

By Julianne Geiger for Oilprice.com

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