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Plunging Natural Gas Prices Is Bad News for Drillers

1. Plunging Natural Gas Prices Is Not Good News for US Oilmen

- The once red-hot labor market for oil services and drilling firms has been contracting in recent months, mostly driven by a pronounced decline in natural gas drilling amidst slumping Henry Hub prices.

- According to the Energy Workforce & Technology Council, some 4,680 oilfield jobs have been lost in the past two months, a reversal of a two-year trend that saw almost continuous growth in drilling jobs.

- The soon-to-be largest US natural gas producer Chesapeake announced this week that it would cut production by roughly 30% following a steep 44% drop in natural gas prices, saying the market is clearly oversupplied.

- Haynesville and Marcellus are particularly impacted by the shutdowns, both being overwhelmingly gas-focused, already prompting the merger of hydraulic fracturing firm NexTier with rival Patterson-UTI.

2. China's 2024 Outlook Gets Murkier Every Month

- Chinese authorities have delivered the biggest ever cut in the 5-year benchmark mortgage rate, by 25 basis points to 3.95%, starting Beijing's own cycle of cutting interest rates.

- Whilst the services segment has remained relatively healthy, China's export-focused manufacturing sector has been contractionary since October, trending sideways at 49.2 in January.

- China's oil demand isn't impressing either despite plentiful quotas allocated, especially after the Lunar New Year holidays failed…

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