US Oil Rig Count Adds 4 as Crude Price Continues to Climb

In the week ended March 23, 2018, the number of land rigs drilling for oil in the United States totaled 804, fourmore than in the previous week and up by 152 compared with a total of 652 a year ago. Including 189 other land rigs drilling for natural gas and one listed as miscellaneous, there are a total of 995 working rigs in the country, five more week over week and up by 186 year over year. The data come from the latest Baker Hughes North American Rotary Rig Count released on Friday.

West Texas Intermediate (WTI) crude oil for May delivery settled at $64.30 a barrel on Thursday and traded up about 1.6% Friday afternoon at $65.39 shortly before regular trading closes.

The natural gas rig count increased by one to 190 this week. The count for natural gas rigs is now up by 35 year over year. Natural gas for April delivery traded down about 0.8% at around $2.60 per million BTUs, and down 30 cents since last Friday.

Crude oil prices have added about 7.7% over the past two weeks, driven by U.S. inventory declines of both crude oil and refined products. A potential U.S. rejection of the multination treaty with Iran has also raised traders’ concerns about supply disruptions, while hedge funds and other nonmarket participants have been trimming their long positions.

The calendar spread (difference) for Brent crude for the second half of this year has widened to more than $2.50 a barrel since mid-March. The wider spread indicates that futures traders expect prices to continue rising.

Among the states, Baker Hughes reported that Texas added seven rigs last week, while Alaska and Colorado each added two rigs. Oklahoma lost four rigs, Utah had two fewer and Ohio lost one.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 444, up by seven from the previous week’s count. The Eagle Ford Basin in south Texas has 72 rigs in operation, one more week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 54 working rigs, unchanged for the week.

Producers added five new horizontal rigs this week to raise the count to 870, while offshore drillers reported no changes and maintained the offshore total at 13, five fewer compared to last year’s total of 18 for the same period.

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