Rig Count Continues Decline In Spite of Higher Oil Prices
North American energy firms have cut the number of oil and natural gas rigs operating to a record low even as higher oil prices prompt some producers to start drilling again.
The number of rigs drilling for hydrocarbons in the Gulf of Mexico (GoM) has averaged 33 during the second quarter thus far, showing a nine-rig, or 21%, drop compared to the first-quarter average, according to Enverus Rig Analytics.
If the situation holds constant through the remainder of the quarter, this would be the lowest level of GoM rig activity in Enverus’ data, which dates back to second-quarter 2014. After bottoming at a quarterly average of 34 in fourth-quarter 2016 after the last oil bust, the count has stayed in a tight range around 40. This compared to a peak of 72 in fourth-quarter 2014.
Oil and gas rig count in the U.S., an early indicator of future output, fell to a record low for a seventh week in a row, dropping by 13 to 266 in the week to June 19, according to data from energy services firm Baker Hughes Co. going back to 1940.
U.S. oil rigs fell by 10 to 189 this week, their lowest since June 2009. Gas rigs dropped by three to 75, their lowest on record according to data going back to 1987.
More than half of the total U.S. oil rigs are in the Permian Basin in West Texas and eastern New Mexico, where active units dropped by five this week to 132, tying a record low set in April 2016, according to data going back to 2011.
In Canada, the oil and gas rig count fell four to an all-time low of 17 this week, according to Baker Hughes.
Even though U.S. crude futures are still down about 35% since the start of the year due to coronavirus demand destruction, they have jumped 133% over the past eight weeks to over $39/bbl on June 19.
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