Oil Rig Count Drops 2 as First US Export Cargo Sails

In the period ended December 31, the number of rigs drilling for oil in the United States totaled 536, compared with 538 in the prior week and 1,482 a year ago. Including 162 other rigs drilling for natural gas, there are a total of 698 working rigs in the country, down by two week over week and down 1,113 year over year. The data come from the latest Baker Hughes Inc. (NYSE: BHI) North American Rotary Rig Count released on Friday.

West Texas Intermediate (WTI) crude oil for February delivery traded up 1.2% on Thursday to settle at $37.07, a drop of more than 30% in 2015. The U.S. Energy Information Administration (EIA) reported last Wednesday that crude supplies had increased by 2.6 million barrels in the week ended December 25.

The first cargo of U.S. crude oil to be exported to somewhere other than Canada or Mexico left the NuStar Energy dock in Corpus Christi on Thursday bound for Italy. The crude and condensate came from ConocoPhillips and the buyer was Swiss trading giant Vitol.

A second cargo is expected to leave Houston within the next several days. Vitol is again the buyer, but the destination has not been identified. The tanker is being loaded at a facility owned by Enterprise Products Partners L.P. (NYSE: EPD).

The number of rigs drilling for oil in the United States is down by 946 year over year and down by two week over week. The natural gas rig count remained unchanged at 162 to end the year. The count for natural gas rigs is down by 166 year over year.

Gasoline stockpiles increased by 900,000 barrels last week, and U.S. refineries ran at 92.6% of capacity, a week-over-week increase of about 214,000 barrels a day. Refinery runs may become a good indicator of how quickly the huge U.S. inventory of crude can be drawn down now that it is once more possible to export crude. With the price differential between WTI and Brent below $1 a barrel, getting U.S. crude to an export terminal cheaply could turn into an advantage for Eagle Ford production and, to a lesser extent, production in the Permian Basin.
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The weekly Commitments of Traders report from Commodity Futures Trading Commission (CFTC) will not be released until Monday, January 4, due to the holiday.

Among the states, California and North Dakota each lost two rigs last week. Ohio, Oklahoma and West Virginia each lost one. Louisiana and Texas each added two and Pennsylvania added one. In the Permian Basin of west Texas and southeastern New Mexico, the rig count rose by five to a total of 217. The Eagle Ford Basin in south Texas lost one rig, bringing its total to 76. The Williston Basin (Bakken) in North Dakota and Montana now has 53 working rigs, down two from the prior week.

Enterprise Products Partners lists a January 2nd posted price of $33.49 per barrel for WTI and a price of $29.74 a barrel for North Dakota Light Sweet. The posted price for a barrel of Eagle Ford crude is $33.90. The price for Permian and Eagle Ford crude fell by about $0.50 a barrel in the past week while North Dakota crude’s price rose by about 15 cents a barrel.

The pump price of gasoline remained virtually unchanged week over week. Saturday morning’s average price in the U.S. is $1.994 a gallon, down a fraction from $2.002 a week ago.