Oil Rig Count Rises by One, Oil Breaks $40 Barrier
The U.S. rig count continued falling for a thirteenth-straight week in the week ended March 18, 2016, according to information from Baker Hughes. The total count fell by four to 476 with five fewer rigs drilling for gas reported partially offset by the addition of one oil rig.
Oil rigs had been declining alongside the total rig count for the past 12 weeks before this week’s addition. The number of oil rigs drilling in the U.S. this week reached 387. The last time the U.S. saw an additional rig drilling for oil was in the week ended December 18, 2015, when 541 oil rigs were operational.
The number of rigs drilling for gas fell by five this week to 89. The gas rig count is now 63% lower than at the same time last year, according to information from Baker Hughes.
Most of this week’s losses came from the Cana Woodford play, which reported three fewer rigs from last week. The Arkoma Woodford, Haynesville, Mississippian, Utica and Williston basins each reported one fewer rig this week as well. The Eagle Ford was the only basin to report more rigs this week than last, with two additional rigs operating in the basin.
Oil bounding back and forth over the $40 mark
U.S. benchmark WTI crude oil closed above $40 per barrel yesterday before making some gains this morning, and then dropping back to $39.67 per barrel as of 2:25 p.m. EST. While the news of additional rigs might have put downward pressure on oil prices, it appears the move has little to do with fundamentals, reports The Wall Street Journal.
It appears the sudden drop in price has more to do with bullish traders taking profits from the recent oil price recovery.
Aiding in the oil price recovery this week is news of a joint OPEC and non-OPEC meeting set to take place next month, in which 15 countries making up approximately 73% of global production will discuss a coordinated production freeze. The U.S. Federal Reserve’s most recent meeting also indicated that the group will be taking a more dovish approach to increasing interest rates in 2016, with two planned rate-raises this year instead of four.
