The number of active oil and gas rigs in the United States fell by a single rig this week, and thus concludes the US shale patch’s impressive run of 23 weeks of steady gains. The decrease comes as oil prices are on track to record their worst first-half performance since H1 1998.
The number of oil rigs in operation decreased by two, while gas rigs increased by one. Combined, the total oil and gas rig count in the US now stands at 940 rigs, which is 509 rigs over a year ago today.
While the numbers were down for the first week in a long time in the United States, Canada has seen four weeks of two-digit gains, adding 90 rigs in total in that timeframe, after this week’s 19-rig gain.
Prices were up earlier on Friday—with WTI trading up 1.42% on the day at $45.57, continuing its recovery from last week’s Friday WTI price of $42.98. Brent was up 1.34% at $48.27 at 12:19pm EST, compared to last week’s Brent price of $45.51.
Both benchmarks have recovered roughly $2.50 from last week, after prices had fallen about $2 in the week prior.
The weekly US rig count provided by Baker Hughes is an important benchmark regarding the health of the oil market—and has perhaps even gained importance amid the oil price crash that began in 2014 and its subsequent semi-recovery. All eyes are ever-watchful of this industry metric, as the surge in US shale output continues to worry markets with its threat to slow drawdowns in fat crude oil stockpiles in the United States. Related: Citi: Oil Prices Have Bottomed And Are Now Set To Soar
Analysts, as well as OPEC—which is curbing oil production in hopes of easing the glut—have vacillated between warning, threatening, and chastising US shale drillers for what they see as reckless production that will eventually crash prices, but US crude inventory has fallen over 26 million barrels in the last 12 weeks, according to the Energy Information Administration’s data, and is now sitting comfortably in the “upper half of the average range for this time of year” at 509.2 million barrels.
Whether it’s a good idea or not, US drillers have given no signs of stopping, but the pace at which rigs are being added has slowed some.
In the first eight weeks of 2017 oil rigs increased by an average of 10 per week. The following eight weeks, from March 3 until April 21, oil rigs gained an average of 11 per week. The eight-week period ending June 16, however, showed an average of only 7 oil rigs added per week.
At 17 minutes after the hour, WTI was trading up 1.47% at $45.59, with Brent trading up 1.36% at $48.28.
By Julianne Geiger for Oilprice.com
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