2020 is starting off with more rig losses, according to Baker Hughes, with the US oil and gas rig count falling by 9 rigs for the week. The total oil and gas rig count is now 279 down from this time last year at a total of 796 rigs.
For oil rigs, this week saw a decrease of 7 rigs, according to Baker Hughes data. The total number of active gas rigs in the United States fell by 2 according to the report, to 123. This compares to 198 a year ago.
The US shed a total of 207 oil rigs throughout 2019, while production grew from 11.7 million bpd at the beginning of the year to the all-time high of 12.9 million bpd for week ending Dec 20, the last week for which there is data.
Oil prices were up sharply on Friday after the US forces in Iraq assassinated Iranian military leader and hardliner Qassem Soleimani, who the US saw as behind the attacks on Saudi Aramco’s oil infrastructure in September 2019.
The WTI benchmark at 10:00am was $63.34 per barrel, up $1.83 from this time last week, and up $2.16 (+3.53%) on the day. The Brent benchmark was trading up at $68.66. up $2.07 per barrel from last week and up $2.41 (+3.64%) on the day.
Canada’s overall rig count decreased this week, with oil and gas rigs falling by 14, on top of last week’s 50-rig decrease. Oil and gas rigs in Canada now stand at just 85, up 9 year on year.
At 7 minutes past the hour, WTI was trading at $62.60 and Brent was trading at $68.20.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
- Russia’s Latest Energy Power Play
- 2020: The Year Of The Oil Bankruptcies
- Oil Rises On Large Crude Draw
How could the author of this article reconcile the loss of 207 oil rigs in 2019 according to Baker Hughes data with the claim that US oil production grew from 11.7 million barrels a day (mbd) at the beginning of 2019 to 12.9 mbd for week ending December 20. If shale oil production could continue to grow despite the loss of 207 rigs in one year, then why were rigs deployed at considerable cost.
The truth of the matter is that Baker Hughes oil rig count decline tells a story of a US shale oil industry facing confirmed production slowdown, declining well productivity and investments, bankruptcies and eventual demise. 2019 was the year in which the hype around US shale oil production finally burst. And despite hype by the US Energy Information Administration (EIA), US production is over-stated by at least 2 mbd. This means that US oil production averaged 10.8 mbd in 2019 and not 12.8 mbd as the EIA claimed and is projected to drop to 10 mbd or less in 2020 and will continue declining until its demise in 5-10 years from now.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London