Baker Hughes reported on Friday that the number of oil and gas rigs in the United States fell this week, bringing the total rig count to 456—still a more than 100-rig gain since the start of the year.
In the week prior, the U.S. oil and gas rig count increased by 2. But the longer trend in rig count additions bodes well for the U.S. oil industry, as drillers pick up the pace but at least so far, displaying some level of trepidation in roaring back. U.S. drillers have added 105 rigs so far this year, more than half of which were added in Texas.
The total number of active oil and gas drilling rigs in the U.S. is now 172 more than this time last year.
The oil rig count stayed the same this week at 359. The number of gas rigs decreased by 1 for the second week in a row, to 97. The number of miscellaneous rigs stayed the same.
The EIA’s estimate for oil production in the United States for the week ending May 28—the last available data—slipped to an average of 10.8 million barrels per day compared to the 13.1 million bpd peak production reached in February 2020, before the pandemic crushed oil demand.
Canada’s overall rig count increased this week by 15. Oil and gas rigs in Canada now sit at 77 active rigs, up 56 on the year.
The rig count in the Permian basin decreased by 1 this week. At 232 rigs, the Permian’s total rig count is now 91 rigs above what it was this time last year, but hundreds below the two years ago level.
The Frac Spread Count provided by Primary Vision shows that fracking crews increased last week to 226. The frac spread count estimates the number of completion crews finishing off previously drilled wells. This frac count is up by nearly 100 so far this year.
At 12:35 p.m. EDT, WTI was trading up $0.58 per barrel on the day at $69.39—up $2.50 per barrel on the week.
The Brent benchmark was trading up $0.40 per barrel on the day, at $71.71 per barrel.
ADVERTISEMENT
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
- Climate Revolt Against Big Oil May Lead To Surge In Crude Prices
- Hedge Funds Grow More Bullish On U.S. Crude Oil
- Biden Nixes $35 Billion In Fossil Fuel Tax Benefits
This is a good sign since disciplined production, profit and dividends to shareholders should become the work ethics of the US shale oil producers. Any deviation from these ethics could lead again to their collapse.
There are two major reasons why shale oil drillers are showing discipline. The first is that investors and shareholders are insisting on a return on their investment and dividends respectively rather than reckless overproduction. The alternative is no provision of funds to the drillers.
The second factor is that the fate of the US shale oil industry rests in the hands of OPEC+. If shale drillers ever try again to undermine OPEC+’s policies to support oil prices and stabilize the oil market by reckless overproduction, OPEC+ will go for a strategy of expanding its market share thus causing prices to fall below the breakeven price of most shale oil producers.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London