The U.S. oil and gas rig count was up only one rig this week, defying a significantly higher upwards trend reported by Baker Hughes for multiple weeks running.
U.S. oil rigs were up three, while natural gas rigs were down two, bringing the total advance to one. Rig gains in Texas’ Permian basin were offset by losses elsewhere.
While this represents the fifth straight increase in the U.S. oil rig count, the pace has fallen from the previous week.
The oil price response has been lackluster and the Baker Hughes data follows a 20% drop in oil prices from recent highs as new concerns hit the market over an increase in the supply glut due to a revival in US production. The market is now bearish.
West Texas Intermediate (WTI) opened trading today at $41.12 and was hovering around $41.24 by midday. Brent crude opened at $43.14 and hit around $43.20 at the time of the rig count release.
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Last week, the U.S. rig count was up 15 oil and gas rigs, nearly doubling the previous week’s rig increase and heralding new supply to add to the existing glut and push oil prices down further.
Texas has seen the biggest gains for the past two weeks, with all 15 new rigs last week brough on line here, and most significantly in the Permian basin, where eight new rigs were active.
The U.S. rig count took a major dive beginning in August 2015, but since May 2016 has started the climb back upwards.
The U.S. rig count is still down 411 from the same time a year ago.
By Charles Kennedy of Oilprice.com
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