After a brutal week for oil prices courtesy of an outbreak of a deadly virus in China, Baker Hughes reported that the number of oil and gas rigs in the US decreased this week, to 794—a decrease of 2 rigs. Oil rigs, however, increased for the week.
The total oil and gas rig count is now 265 down from this time last year.
For oil rigs, this week saw an increase of 3 rigs, according to Baker Hughes data, bringing the total to 676—a 186-rig loss year over year.
The total number of active gas rigs in the United States fell by 5 according to the report, to 115. This compares to 197 a year ago.
Meanwhile, production has finally surpassed the psychologically important threshold of 13 million bpd, according to data provided by the Energy Information Administration, where it has sat for two weeks.
The WTI benchmark at 11:58pm was $54.23 (-2.45%) per barrel—a more than $4 per barrel decline from this time last week as fears of slowing demand in China once again takes over the market concerns as the new SARS Coronavirus has restricted travel in China ahead of the Lunar New Year weekend. The Brent benchmark was trading at $59.89 (-2.27%)—nearly $5 per barrel below last week’s levels.
What’s more, the EIA is expecting that US shale production will increase by another 22,000 bpd in February, according to the latest Drilling Productivity Report published this week.
Canada’s overall rig count stayed the same this week, at a total of 244 rigs. Oil and gas rigs in Canada are now up 79 year on year.
At 6 minutes past the hour, WTI was trading at $54.23, while Brent was trading at $59.80.
By Julianne Geiger for Oilprice.com
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How does the EIA reconcile an increase of 700,000 b/d with a loss of 186 oil rigs in 2019, credible reports from highly authoritative sources of a confirmed slowdown in shale oil production, a reduction in well productivity and numerous bankruptcies with such a rise in oil production?
Moreover, there is a huge discrepancy between an increase of 700,000 b/d from December to January and a projected increase of only 22,000 b/d between January and February.
I have always accused the EIA of excessive hyping about US shale potential and US oil production. But now the EIA has gone beyond hyping to being economical with the truth.
US oil production is overstated by at least 2.00 mbd because of inclusion of gases such as ethane, propane, butane and pentanes which don’t qualify as crude oil and have never been sold as crude. This means that US production in 2019 averaged only 10.3 mbd and not 12.3 as the EIA claimed. Production in 2020 is projected to be below 10 mbd.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London