Baker Hughes reported a drastic reduction to the number of active oil and gas in the United States this week.
The total number of active oil and gas drilling rigs fell by 25 rigs, according to the report, with the number of active oil rigs decreasing by 21 to reach 852 and the number of gas rigs decreasing by 4 to reach 198.
The oil and gas rig count is now 114 up from this time last year, 105 of which is in oil rigs.
WTI prices were trading significantly up on Friday as China extended an offer to US negotiators to boost imports from the United States through 2024 by 1 trillion annually, according to CNBC.
At 12:13pm EST, the WTI benchmark was trading up $1.49 (+2.85%) at $53.85-up roughly $2 week on week, with Brent crude trading up $1.47 (+2.40%) at $62.65 per barrel-up almost $2 week on week.
Canada's oil and gas rigs increased by 25 rigs this week, after climbing by 108 rigs last week. Canada's total oil and gas rig count is now 209, which is 116 fewer rigs than this time last year. All 25 additions were to oil rigs. The increase in rigs this week is despite Canada's new mandate that called for the country to collectively shave 300,000 bpd off its crude oil production figures that went into effect at the start of the month.
The EIA's estimates for US production for the week ending January 11 shows an increase at an average rate of 11.9 million bpd for the week-another new record for the United States.
By 1:29pm EDT, WTI had increased by 2.98% (+$1.56) at $53.92 on the day. Brent crude was trading up 2.35% (+$1.44) at $62.62 per barrel.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
Comments
As of my typing this, front-month contracts for WTI (CLG9 = February 2019 delivery) are $11.56 off the recent low of $42.36. That is more than a 27% gain, which has been made since OPEC+ announced production cuts, and ever since, API & EIA have posted massive builds in gasoline stockpiles...So, why then is RBOB up at all lately?
This is why so many people complain about gasoline prices: RBOB tends to trade in tandem with WTI (thereby dismissing any need for 2 separate futures products, evidently), and WTI as of late tends to trade in tandem with equities (given the overall sentiment of the direction of the economy). However, by not trading down RBOB when there are repeated builds, it leads to a price comparison to WTI that doesn't make sense--We are paying as much for gasoline as we did with $75/bbl oil!
Next, my "market manipulation meter" says the only reason the rig count data shows such massive declines is because front-month contracts are expiring on Tuesday afternoon, and so as history has shown, WTI will soar until that very moment. My guess is 'algos' will push WTI to ~$60. Really? What data do we have since the announcement of production cuts to support such prices? I mean, honestly, we haven't had such large rig count declines in years...why didn't we see this drop in December when we reached the low of $42.36 on WTI? My, what convenient timing!
I say, let's see what OPEC+ can do with $11.56 extra per barrel before we give them anything more, as I cannot think of a single investment out there that has moved up by at least 27% in the same time.
Great statement Neil, well said, again. I have only read comments, this is the first time I have not wiped my face in frustration, clarity and by not trading down RBOB when there are repeated builds. We are paying as much for gasoline as we did with $75/bbl.
Have a good evening, enjoyed your blog