In the week ended July 17, the number of rigs drilling for oil in the United States totaled 638, compared with 645 in the prior week and 1,554 a year ago. Including 219 other rigs mostly drilling for natural gas, there were a total of 857 working rigs in the country, down six over the past week and down 1,014 year over year. Last week ended two consecutive weeks of increases in the U.S. rig count. The data come from the latest Baker Hughes Inc. (NYSE: BHI) North American Rotary Rig Count.

Since the beginning of July, West Texas Intermediate (WTI) crude oil has dropped from near $60 a barrel to just over $51 a barrel. It touched $50.50 briefly on Friday, its lowest point in three months and only about a dollar above WTI’s lowest price in six months. The 52-week low is $49.69.

The most important market news last week was the announced agreement with Iran on further development of its nuclear program. Iran currently produces about 2.8 million barrels a day, more than a million barrels a day below its production level before sanctions against the country were imposed. More than half of Iran’s current production is consumed domestically and the rest is exported. While the Iranian government is projecting that the country’s oil production will add a million barrels a day within six months, it is far more likely to take at least a year to add that much oil.

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That doesn’t mean a lifting of the sanctions against the country will not have a relatively immediate impact. An estimated 30 million to 40 million barrels of crude have been loaded onto ships that are sailing in circles in the Persian Gulf, just waiting for sanctions to be lifted, which U.S. officials say is unlikely to happen until late this year.

U.S. refineries were running at more than 95% of capacity, with daily input of more than 16.8 million barrels a day, about 229,000 barrels a day more than the previous week. Refiners have boosted throughput by 300,000 barrels a day over the past two weeks. Imports also were essentially flat last week at around 7.4 million barrels a day.
The number of rigs drilling for oil in the United States fell by 916 year over year and dropped by seven from the previous week. The natural gas rig count increased by one to a total of 218. The count for natural gas rigs is down by 97 year over year.

Gasoline stockpiles rose by just 100,000 barrels last week, even though refinery run levels increased. That means it is likely that exports of refined products rose. U.S. gasoline inventories remain in the upper half of the five-year average range.

Hedge funds — under the Managed Money heading in the Commodity Futures Trading Commission (CFTC) Commitments of Traders report — cut their long positions last week by 21,348 contracts and boosted their short positions by 12,333 contracts. The movement reflects changes as of the July 14 settlement date. Managed money holds 258,100 long positions, compared with 110,751 short positions.

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Among the producers themselves, short positions outnumber longs, 352,361 to 210,525. The number of short positions last week rose by 6,981 contracts and longs added 9,373 positions. Positions among swaps dealers show 346,572 shorts versus 199,924 longs. Swaps dealers added 15,453 contracts to their long positions last week and cut 16,129 short contracts.

Six states lost 13 rigs last week: Louisiana dropped six; North Dakota, Pennsylvania and Texas lost two each; and California and Oklahoma each lost one. Alaska, Colorado, Kansas and New Mexico added one each. Totals remained unchanged in the other states.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count rose by three to 242. The Eagle Ford Basin in south Texas lost four rigs to finish the week with a count of 98, and the Williston Basin (Bakken) in North Dakota and Montana now has 69 working rigs, down two from the prior week.

Enterprise Products Partners L.P. (NYSE: EPD) lists a posted price of $47.34 per barrel for WTI and a July 18 price of $42.91 a barrel for North Dakota Light Sweet. The posted price for a barrel of Eagle Ford crude is $47.14. All prices are around $2.00 a barrel lower than they were a week ago and have dropped by nearly $6 a barrel in the past two weeks.

The pump price of gasoline decreased slightly week over week. Saturday morning’s average price in the United States was $2.759 a gallon, down fractionally from $2.761 a week ago.

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