Rig count is down again but decline rate seems to be slowing.
According to Enervus, the rig count in the U.S. is down 21% in the last month. As of June 10, the count is and down 68% since this time last year. Anadarko Basin rigs declined 6% and 8% in the Appalachia Basin but the decline rates have started to slow. The D-J Basin actually added two rigs in the last month, but activity remains low at seven.
According to James Williams of WTRG Economics in Arkansas, “Rig activity may continue to decline for a few weeks but the recent recovery in oil prices if sustained should lead to a reversal near the end of the month.” He also noted that gas drilling may start to recover before oil.
After rising over 130% over the prior six weeks, U.S. crude futures were trading at about $36/bbl on June 12, putting the contract down about 10% this week and down around 40% since the start of the year. Analysts said they expect U.S. energy firms to continue chopping rigs as they cut spending for the rest of the year and keep the count low in 2021 and 2022.
U.S. crude output is forecast to drop to 11.6 million bbl/d in 2020 and 10.8 million bbl/d in 2021 from 12.2 million bbl/d in 2019, the U.S. Energy Information Administration said in its latest outlook.
Also see Hart Energy’s weekly rig count regional details (Eastern, Gulf Coast, Midcontinent/Permian Basin and Western).
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