In the week ended February 12, the number of rigs drilling for oil in the United States totaled 439, compared with 467 in the prior week and 1,056 a year ago. Including 102 other rigs drilling for natural gas, there are a total of 541 working rigs in the country, down 30 week over week and down 817 year over year. The data come from the latest Baker Hughes Inc. (NYSE: BHI) North American Rotary Rig Count released on Friday.

Benchmark West Texas Intermediate (WTI) crude oil for March delivery traded up more than 12% on Friday to settle at $29.44, a drop of about 4.7% for the week. The U.S. Energy Information Administration (EIA) reported last Wednesday that crude supplies had increased by just 800,000 barrels in the week ended February 5 and that gasoline supplies had risen by 1.3 million barrels.

Crude oil prices rose sharply at the end of the week following a statement by the energy minister of the United Arab Emirates (UAE) that OPEC is willing to cooperate on production cuts in order to raise prices. In our view, traders overreacted and sent crude prices soaring on wishful thinking. As long as Saudi Arabia can call the shots for the cartel, and as long as Iran is looking to regain market share now that sanctions have been lifted, OPEC production is unlikely to move in any direction other than higher.

The number of rigs drilling for oil in the United States is down by 617 year over year and down by 28 week over week. The natural gas rig count dropped by two, from 104 to 102. The count for natural gas rigs is down by 198 year over year. Natural gas for March delivery closed the week at $1.97 per million BTUs, down nine cents from $2.06 at the end of the prior week.

U.S. refineries ran at 86.1% of capacity, a week-over-week decrease of about 105,000 barrels a day. Imports fell to around 7.1 million barrels a day in the week, a week-over-week decrease of 1.1 million barrels a day.

Hedge funds — under the Managed Money heading in the Commodity Futures Trading Commission (CFTC) weekly Commitments of Traders report — cut 8,408 short contracts last week and 2,275 long contracts. The movement reflects changes as of the February 9 settlement date. Managed money holds 270,210 long positions, compared with 197,807 short positions. Open interest totaled 1,854,379. There were 77 hedge funds with large short positions last week, an increase of four compared with the prior week.

Among the producers themselves, short positions outnumber longs by more than two to one, 464,509 to 211,963. The number of short positions fell by 3,104 contracts last week and longs fell by 12,261 positions. Positions among swaps dealers show 188,146 shorts versus 239,806 longs. Swaps dealers dropped 1,636 contracts from their short positions last week and added 12,421 long contracts.

Among the states, Texas dropped 14 rigs last week, New Mexico and Oklahoma lost four each, North Dakota shed three and Colorado, Pennsylvania and Wyoming each lost two, while Kansas lost one. California and Louisiana each added a rig last week.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count fell by eight to a total of 172. The Eagle Ford Basin in south Texas dropped two to a new total of 58. The Williston Basin (Bakken) in North Dakota and Montana now has 39 working rigs, down three from the prior week.

Enterprise Products Partners L.P. (NYSE: EPD) lists a posted price of $25.89 per barrel for WTI and a February 13 price of $19.15 a barrel for North Dakota Light Sweet. The posted price for a barrel of Eagle Ford crude is $25.84. The price for all three crude varieties fell by about $1.45 a barrel in the past week.

The pump price of gasoline fell by about 3% week over week. Saturday morning’s average price in the United States was $1.698 a gallon, down from $1.752 a week ago.

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