US drillers added 1 rig to the number of oil and gas rigs this week, according to Baker Hughes, with oil rigs increasing by 2 and gas rigs dipping by 1. The oil and gas rig count now stands at 1,060—up 144 from this time last year. The Cana Woodford basin saw the biggest increase in the number of rigs, at 3; The Permian lost one.
Meanwhile, neighboring Canada gained 18 oil and gas rigs for the week.
Oil benchmarks were trading down on Friday, skittish after Saudi Arabia and Russia committed to ramping up production to as much as 1 million barrels per day before the production cut deal ends at the end of this year, should it become a necessary step to meet demand with Venezuela’s falling production and Iran’s possible production or export shortfalls in the wake of US sanctions against it. Oil prices took another blow with Rosneft unexpectedly increasing production by 70,000 bpd, to prepare for OPEC and NOPEC possibly relaxing the production quotas.
The markets dissatisfaction with that maneuver was apparent in afternoon trading. At 12:21pm EST, WTI had slipped $0.43 (-0.64%) to $66.61, with Brent falling $0.94 (-1.21%) to $76.62. Brent crude is trading at nearly the same level as this time last week, but the WTI benchmark is trading almost $2 lower than last week levels. The premium for Brent over WTI is now significant, and near three-year highs.
US oil production is also pressing down on oil prices, and for the week ending May 25, reaching 10.769 million bpd—the fourteenth build in as many weeks. US production continues to climb at a time when OPEC is beholden to a supply cut deal that looks to remove 1.8 million bpd from the once-saturated market. At the time the deal was announced, the United States was producing 8.6 million bpd. Today, the US is producing more than 2.0 million bpd over that figure, while OPEC/NOPEC continues to curb supply on its end.
By Julianne Geiger for Oilprice.com
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