Energy

Oil Rig Count Jumped by 11 Last Week, Hedge Funds Changed Directions Again

Paul Ausick

Published: July 2, 2016 9:33 am

Last Updated: January 13, 2020 6:08 am

In the week ended July 1, the number of rigs drilling for oil in the United States totaled 341, up by 11 compared with the prior week and a total of 640 a year ago. Including 89 other rigs drilling for natural gas and one rig listed as “miscellaneous,” there are a total of 431 working rigs in the country, up 10 week over week and down 431 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 August delivery traded up about 2% on Friday to settle at $48.28, up 3.4% for the week after posting a weekly high of $50.00 on Wednesday. The U.S. Energy Information Administration (EIA) reported last Wednesday that crude supplies had decreased by 4.1 million barrels in the week ended June 24, and that gasoline supplies had dropped by 58,000 barrels.

The EIA released its monthly petroleum crude oil and natural gas production report for April on Thursday showing that motor gasoline supplied for the month fell from 9.399 million barrels a day in March to 9.213 million barrels a day. The March total was nearly 200,000 barrels a day above the February total. The 2015 average was 9.161 million barrels a day.

Demand for gasoline has risen as Americans are driving more and buying less fuel-efficient large vehicles like SUVs and pickup trucks. As John Kemp at Reuters points out, there is undoubtedly some noise in the data responsible for the high March reading and the low April reading.

We should also note that natural gas prices touched $3.00 per million BTUs on Friday, the first time that’s happened since last August. The 52-week range for natural gas is $1.99 to $3.18.

The number of rigs drilling for oil in the United States is down by 299 year over year and up by 11 week over week. The natural gas rig count fell by 1 rig to 89. The count for natural gas rigs is down by 130 year over year. Natural gas for July delivery closed the week at $2.99 per million BTUs, up about 29 cents compared with the prior week.

U.S. refineries ran at 93% of capacity, a week-over-week increase of about 190,000 barrels a day. Imports fell by about 884,000 barrels a day, to around 7.6 million barrels a day in the week.

Hedge funds — under the Managed Money heading in the Commodity Futures Trading Commission’s (CFTC) weekly Commitments of Traders report — added 24,794 short contracts last week, and dropped 3,571 long contracts. The movement reflects changes as of the June 28 settlement date. Managed money holds 275,846 long positions compared with 123,235 short positions. Open interest totaled 1,720,740. There were 53 hedge funds with large short positions last week, up by 5 compared with the prior week. The Brexit vote cooled enthusiasm for the prior week’s long bets.

Among the producers themselves, short positions outnumber longs by more than 2 to 1, 464,289 to 193,911. The number of short positions rose by 14,567 contracts last week, and longs rose by 20,459 contracts. Positions among swaps dealers show 248,784 short contracts versus 211,378 long positions. Swaps dealers dumped 10,116 contracts from their short positions last week and 6,211 contracts from their long positions.

Among the states, Texas and Oklahoma each added 4 rigs last week, Colorado added 2, and Louisiana added 1 rig. Alaska and New Mexico each lost a rig.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count rose by 4 to 154. The Eagle Ford Basin in south Texas dropped by 1 to total 33, and the Williston Basin (Bakken) in North Dakota and Montana now has 26 working rigs, unchanged compared with the prior week.

Enterprise Products Partners L.P. (NYSE: EPD) lists a posted price of $45.44 per barrel for WTI and a July 2 price of $46.39 a barrel for Eagle Ford crude. The price for both varieties dropped by 12 cents a barrel over the past week.

The pump price of gasoline fell by about 1.4% week over week. Saturday morning’s average price in the United States was $2.278 a gallon, down from $2.311 a week ago. The year-ago price was $2.767 a gallon.