US Oil Rig Count Slips, Price on Track to Close Flat for the Week

In the week ended December 15, 2017, the number of rigs drilling for oil in the United States totaled 747, down by four from the prior week and up by 237 compared with a total of 510 a year ago. Including 183 other rigs drilling for natural gas, there are a total of 930 working rigs in the country, one less week over week and up by 293 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 January delivery settled at $57.04 a barrel on Thursday and traded up about 0.6% Friday afternoon at $57.37 shortly before the close of regular trading.

The natural gas rig count rose by three to 183 this week. The count for natural gas rigs is now up by 57 year over year. Natural gas for January delivery traded down 3.6% at around $2.79 per million BTUs before the count was released and was essentially unchanged following the report’s release.

Crude oil prices are on track to post a loss this week after reports from the International Energy Agency, OPEC and the U.S. Energy Information Administration all indicated that while global inventories are falling, production next year in non-OPEC countries is forecast to rise.

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The United States is tagged to raise production the most, but the industry is proceeding cautiously with plans for new drilling next year. As prices have risen over the past several months more producers have hedged portions of their 2018 production at a level that guarantees a better cash flow than they saw in 2016 and 2017. Many are likely to reward patient stockholders with either a dividend hike or a buyback.

Among the states, Pennsylvania added three rigs this week while North Dakota and Wyoming each added one. Texas and New Mexico each lost two rigs and Louisiana lost one.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 397, three less compared with the previous week’s count. The Eagle Ford Basin in south Texas has 70 rigs in operation, unchanged week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 48 working rigs, up one for the week.

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