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Baker Hughes reported another 3-rig increase to the number of oil and gas rigs this week.

The total number of oil and gas rigs now stands at 984, which is an addition of 216 rigs year over year.

Despite the overall increase, the number of oil rigs in the United States decreased by 4 this week, for a total of 796 active oil wells in the US—a figure that is 179 more rigs than this time last year. The number of gas rigs rose by 7 this week, and now stands at 188; 37 rigs above this week last year.

The oil and gas rig count in the United States has increased by 60 in 2018.

Canada continued its losing streak, with a decrease of 29 oil and gas rigs for the week. Canada now has fewer rigs than it did a year ago.

Despite multiple bearish events this week, oil prices managed to climb, buoyed in part on Friday by positive job reports and reports about a possible meeting between President Donald Trump and North Korea’s leader, Kim Jong Un.

Neither the threat of steel tariffs—which some analysts opine could increase pipeline and other oil infrastructure costs—nor US crude oil production, which rose again in the week ending March 2nd to 10.369 million bpd, according to the EIA were able to keep oil prices down.

At 11:45 am EST, the price of a WTI barrel was resilient, trading up $1.72 (+2.86%) to $61.84—a significant increase from last week’s prices. The Brent barrel was also trading up on the day, by $1.76 (+2.77%) to $65.37.

Alaska, Louisiana, New Mexico, Oklahoma, and Utah all lost rigs this week, with Texas adding 7 rigs for a total of 490 active rigs—an increase of 98 over this time last year.

At 1:09pm EST, both benchmarks had lost some ground, with WTI trading at $61.77 (+$1.65) and Brent trading at $65.13 (+$1.52).

…click on the above link to read the rest of the article…

Rig Count Slumps To 3-Month Lows As US Crude Production Collapses

September 8, 2017

Rig Count Slumps To 3-Month Lows As US Crude Production Collapses

US crude production collapsed this week with most of Texas offline and we would expect rig counts to have continued to stabilize (if not fall) following the lagged track of WTI, and they did – oil rigs dropped 3 to 756, the lowest since June.

As a reminder, Crude production in the Lower 48 collapsed…

This is the biggest week-on-week fall since August 2012, when Hurricane Isaac shut in more than 1.3 million barrels a day of Gulf of Mexico production.

Uncertainty has the “market pulling in their horns ahead of the storm. They are worried about demand destruction,” Phil Flynn, senior market analyst at Price Futures Group, says. The market also “seems to be a little technically heavy”

US Crude Production Stalls As Oil Rig Count Rolls Over

September 1, 2017

US Crude Production Stalls As Oil Rig Count Rolls Over

Amid the chaos and turmoil caused by Harvey, today’s rig count data is likely to change things as much as a fart in a hurricane. US crude production in the Lower 48 actually fell last week, syncing with the stabilization in the lagged oil rig count.

The US Oil Rig count held to two-month lows last week, unchanged at 759…

US Crude production in the Lower 48 dropped last week following a stabilization in rig counts (but rose 2k overall thanks to a pick up in Alaska)…

Notably RBOB prices are down today (and WTI) as John Kilduff, a partner at Again Capital, notes “The government is actually reacting positively trying to address and do what they can,… There are some signs of life in several of the refineries already and the 1 million-barrel tapping of the SPR is also helping to ease anxieties over the storm”

Rig Count Rises To April 2015 Highs As Analysts Warn “Oil Market Rebalancing Hasn’t Even Started Yet”

July 14, 2017

Rig Count Rises To April 2015 Highs As Analysts Warn “Oil Market Rebalancing Hasn’t Even Started Yet”

After falling for the first time this year two weeks ago, Baker Hughes reports US oil rig count rose once again (up 2 to 765) for the 24th week in the last 25, to the highest since April 2015.

“The so-called re-balancing is likely to happen later than earlier,” Michael Poulsen, an analyst at Global Risk Management Ltd, said on Friday.

It does appear we have reached an inflection point in the rig count numbers (if the historical relationship with crude holds)…

While EIA cut its 2018 production outlook, this week saw the effect of field maintenance in Alaska and Tropical Storm Cindy in the Gulf of Mexico fall away and production surged once again this week – to new cycle highs…

And the lagged rig count trend suggests crude production has further to rise yet…

Crude prices have been active today with macro headlines hurting and machines helping ramp any dip… the rig count create iunstant selling which was instantly bid back upo,,,

And while US crude production just jumped to cycle highs (and shale production we believe reached a record high), OilPrice.com’s Nick Cunningham notes the oil market rebalancing hasn’t even started yet…

Global oil production surged in June “as producers opened the taps,” according to a new report from the International Energy Agency (IEA). OPEC was a major culprit, with Libya and Nigeria doing their best to scuttle the production cuts made by other members.

But it wasn’t just those two countries, who are exempted from the agreed upon reductions. OPEC’s de facto leader, Saudi Arabia, also boosted output by an estimated 120,000 bpd in June, from a month earlier. That put Saudi production above 10 million barrels per day (mb/d) for the first time in 2017.

…click on the above link to read the rest of the article…

US Oil Rig Count Rises For 23rd Straight Week But High Costs Drive Investors Out Of The Permian

June 23, 2017

US Oil Rig Count Rises For 23rd Straight Week But High Costs Drive Investors Out Of The Permian

The number of oil rigs in America has now risen for 23 straight weeks (and 50 of the last 52 weeks), up 11 to 758 in the last week – the highest since April 2015. “It’s becoming bearish mania,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago. “If we keep going down, we’re not going to be adding rigs in a few months, we’re not going to be adding production”

And we suspect, given the lagged reaction to prices, that inflection point in rig counts is close…

And the last chance for the week for the bulls just left…

US crude production (in the Lower 48) has been on a tear (with one brief interruption) tracking the lagged rise in rig counts almost perfectly…

And the rising rig count has been driven mainly by The Permian…

But as Oil & Gas 360 notes, high acreage costs beginning to affect economics in the Delaware, driving investors away from The Permian.

The Permian has enjoyed a rush of capital since oil prices began to recover from a low of $26.21 in February of last year.

The play is home to some of the best economics in the country, making it a prime target for E&P companies looking to maximize profit in a lower price environment. But the surge in land costs is leaving little room for new investors to profit.

The Delaware basin, the Permian’s hottest zone, is beginning to become a victim of its own success. EnerCom Analytics’ well economic models indicate that the internal rates of return (IRRs) in the Delaware are now lower than those seen in the Midland due to the high cost of land.

…click on the above link to read the rest of the article…

Lower 48 Production Nears Cycle Highs As Rig Count Rises For 18th Straight Week

May 19, 2017

Lower 48 Production Nears Cycle Highs As Rig Count Rises For 18th Straight Week

While much was made of this week’s drop in US crude production, it was driven by an Alaskan supply drop, not the Lower 48 whose production is at Aug 2015 highs. WTI back above $50 on the back of more OPEC jawboning appears to have everyone convinced this time is different, but for the 18th week in a row US oil rig counts rose (by 8 to 720).

*U.S. OIL RIG COUNT +8 TO 720 , BAKER HUGHES SAYS :BHI US
*U.S. GAS RIG COUNT 180 , BAKER HUGHES SAYS :BHI US

The 18th weekly oil rig count rise…

Production from the Lower 48 continues to soar…

And WTI dipped a little on the print…

And while prices hover above $50, OilPrice.com’s Brian Noble warns that as breakeven prices converge an oil price crash nears…

No one should underestimate the impact of AI (artificial intelligence) on the future of the entire capital markets complex. The LinkedIn group, Algorithmic Traders Association, has recently been running a series of articles warning of the seismic shift that is and will continue to be felt in the global hedge fund industry as machines take over from people on trading desks.

But what intelligent human being would ever suddenly have turned bullish on the morning of Monday 15 May 2017 just because of renewed jawboning from Saudi Arabia and Russia, indulging in the same old two-step as they did at Doha in April 2016 and Vienna in November of last year. That is however precisely what the machines did. Hallelujah.

…click on the above link to read the rest of the article…

US Crude Production Tops 9 Million Barrels As Rig Count Hits 16-Month Highs

February 24, 2017

US Crude Production Tops 9 Million Barrels As Rig Count Hits 16-Month Highs

The US oil rig count rose once again this week (up 5) to 602 – the highest since October 2015.

US crude production is surging – back above 9 million barrels/day in the last week – the largest since April 2016.

The lagged response to rig count builds implies considerably more production to come.

US Oil Rig Count Points To A Sharp Decline In Production

March 2, 2016

US Oil Rig Count Points To A Sharp Decline In Production

The North American Baker Hughes Rig Count came out Friday. The decline continues. Baker Hughes gives an oil and gas breakout for every basin and state with five years of historical data.

Bh Historical

Baker Hughes has twenty eight and one half years of historical data for total US rigs but only five years for individual basins. Gas rigs peaked in August 2008 at 1,606 rigs, over six years before the peak in Oil rigs. On February, 26, gas total US gas rig count stood at 102, a decline of over over 93%.

BH Total US

A closer look at the total US total rig count.
October 10, 2014 1,609 rigs
February 26, 2016 400 rigs
Percent decline 75%

BH Bakken

In figuring the percent decline for each basin I have use October 10 as peak, the week US rigs peaked even though all basins did not peak on that week.

Bakken
October 10, 2014 198 rigs
February 26, 2016 36 rigs
Percent decline 82%

…click on the above link to read the rest of the article…

The U.S. Production Decline Has Begun

April 30, 2015

The U.S. Production Decline Has Begun

It is not because of decreased rig count. It is because cash flow at current oil prices is too low to complete most wells being drilled.

The implications are profound. Production will decline by several hundred thousand of barrels per day before the effect of reduced rig count is fully seen. Unless oil prices rebound above $75 or $85 per barrel, the rig count won’t matter because there will not be enough money to complete more wells than are being completed today.

Tight oil production in the Eagle Ford, Bakken and Permian basin plays declined approximately 111,000 barrels of oil per day in January. These declines are part of a systematic decrease in the number of new producing wells added since oil prices fell below $90 per barrel in October 2014 (Figure 1).

Figure 1. Eagle Ford, Bakken and Permian basin new producing wells by month and WTI oil price. Source: Drilling Info and Labyrinth Consulting Services, Inc.
(Click image to enlarge)

Deferred completions (drilled uncompleted wells) are not discretionary for most companies. Producers entered into long-term rig contracts assuming at least $90 oil prices. Lower prices result in substantially reduced cash flows. Capital is only available to fulfill contractual drilling commitments, basic costs of doing business, and to complete the best wells that come closest to breaking even at present oil prices.

Much of the new capital from junk bonds and share offerings is being used to pay overhead and interest expense, and to pay down debt to avoid triggering loan covenant thresholds.Hedges help soften the blow of low oil prices for some companies but not enough to carry on business as usual when it comes to well completions.

…click on the above link to read the rest of the article…

Big Hit For U.S. Oil Production In January

April 24, 2015

Big Hit For U.S. Oil Production In January

U.S. crude oil production fell at least 135,000 barrels of oil per day in January 2015 compared to December 2014 according to the EIA (Figure 1).

Figure 1. U.S. crude oil production. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Bakken Shale production fell the most of any play or jurisdiction losing 37,000 barrels per day in North Dakota and 4,000 barrels per day in Montana for a total of 41,000 barrels of oil per day (Figure 2). Production in California, the offshore Gulf of Mexico, Alaska and Wyoming also declined significantly.

Figure 2. January 2015 production changes by jurisdiction. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Figure 3 shows Bakken production based on DrillingInfo data. The 42,000 barrels of oil per day drop in January production is completely consistent with EIA data differing by only 1,000 barrels per day.

…click on the above link to read the rest of the article…

11 Signs That We Are Entering The Next Phase Of The Global Economic Crisis

April 24, 2015

11 Signs That We Are Entering The Next Phase Of The Global Economic Crisis

Well, the Nasdaq finally did it. It has climbed all the way back to where it was at the peak of the dotcom bubble. Back in March 2000, the Nasdaq set an all-time record high of 5,048.62. On Thursday, after all these years, that all-time record was finally eclipsed. The Nasdaq closed at 5056.06, and Wall Street greatly rejoiced. So if you invested in the Nasdaq at the peak of the dotcom bubble, you are just finally breaking even 15 years later. Unfortunately, the truth is that stocks have not been soaring because the U.S. economy is fundamentally strong. Just like the last two times, what we are witnessing is an irrational financial bubble. Sometimes these irrational bubbles can last for a surprisingly long time, but in the end they always burst. And even now there are signs of economic trouble bubbling to the surface all around us. The following are 11 signs that we are entering the next phase of the global economic crisis…

#1 It is being projected that half of all fracking companies in the United States will be “dead or sold” by the end of this year.

#2 The rig count just continues to fall as the U.S. oil industry implodes. Incredibly, the number of rigs in operation in the United States has fallen for 19 weeks in a row.

#3 McDonald’s has announced that it will be closing 700 “poor performing” restaurants in 2015. Why would McDonald’s be doing this if the economy was actually getting better?

#4 As I wrote about the other day, we could be right on the verge of a Greek debt default. In fact, we learned on Thursday that the Greek government has been “running on empty” for months…

…click on the above link to read the rest of the article…

The Latest Media Attempts To Suppress Oil Prices

April 18, 2015

The Latest Media Attempts To Suppress Oil Prices

It started with the Iranian supply overhang and has grown louder by the day in the media. While we were all supposed to be cowering in fear at the 1MB/D that would be coming from Iran any day, it emerged instead that not only is the deal in doubt, as the only real agreement was to agree to say there was an agreement, but any such additional supply won’t occur imminently. Far from it.

That sanctions will only be lifted through intensive verification is now the reality and this process will take time. And even that isn’t fully agreed upon as we now learn. Be that as it may, we wake up yet again with more evidence that the Cushing cries have all but died and now shifted to the forward curve which has flattened. This is the normal course after a price collapse as the market begins to gain confidence that it will rebalance soon.

Hedging by producers is now also playing a role as the financially strapped ones are pressuring prices to lock in whatever little profit they have, ahead of the October credit redetermination, in order to preserve liquidity. A further source of pressure is articles now seeping out at an increasing rate in the media regarding OPEC increasing production (which only appears as a response to much higher than anticipated demand, disproving what the same media asserted months ago). OPEC’s strategy will most likely be short-lived but now, if one can believe it, we’re supposed to buy the latest “worrying news” of rig counts increasing?

…click on the above link to read the rest of the article…

Rig Count Data Shows Gulf States Cranking Up Pressure On The U.S.

April 15, 2015

Rig Count Data Shows Gulf States Cranking Up Pressure On The U.S.

The global rig count statistics published by Baker Hughes provide a crucial industry activity indicator and some of the most up to date industry statistics available. This is a short report updating international statistics to March 2015 and US statistics to 10 April 2015.

MiddleEastRigCount

Figure 1 The Middle East OPEC gulf states continue to confound expectations by increasing their rig count and drilling, evidently intent on keeping the oil market over-supplied and the oil price suppressed. Oil rig count for these 4 countries increased 6 to 161 for the month of March. Saudi oil production hit a new record of 10.3 Mbpd in March. Oil Minister Ali Al-Naimi wants price stability and order to return to the market but on OPEC’s terms.

WorldRIgCOunt

Figure 2 The international oil rig count peaked at 1080 in July 2014 and has since fallen 104 (10%) to 976 units in March 2015. This is as yet a very muted response to what is a full blown industry crisis. It does take longer for offshore drilling to wind down and it is possible that companies with rigs on contract have simply parked them for the time being.

…click on the above link to read the rest of the article…

Total Rig Count Decline Fastest Since 1986 As Weekly Rig Count Drop Re-Accelerates

April 10, 2015

Total Rig Count Decline Fastest Since 1986 As Weekly Rig Count Drop Re-Accelerates

With crude production and inventories hitting record highs this week, it is likely no surprise that rig counts continued to decline – falling 40 to 988 total rigs (and down 42 to 760 oil rigs). This is the 18th week in a row of total rig count declines – equal to the record series from 2008/9. At 48.5%, this is the biggest 18-week decline since 1986.

*U.S. TOTAL RIG COUNT DOWN 40 TO 988 , BAKER HUGHES SAYS
*U.S. OIL RIG COUNT DOWN 42 TO 760, BAKER HUGHES SAYS
Notably Arkansas and Kansas saw rig counts increase (8 to 9 and 12 to 13 respectively)

The weekly pace of decline has accelerated…

This is the biggest 18-week plunge since 1986…

And Production re-accelerates (US and Saudi oil production record high, Iraq and Libya also boosted production in March) even as rig count collapses…

And Crude’s initial response…Nothing

Charts: Bloomberg

This Is What Will Determine If Oil Prices Go Up Or Down

April 3, 2015

This Is What Will Determine If Oil Prices Go Up Or Down

It appears as if oil prices could be on the verge of a rebound, with new data showing that the U.S. oil patch is hitting an inflection point. While specific shale regions – such as North Dakota’s Bakken and Texas’ Eagle Ford – have posted production declines, overall U.S. oil output managed to edge up in recent months.

But now that U.S. production has finally dipped, it may augur a new phase for oil markets in which production cutbacks could lead to higher prices. The Energy Information Administration reported on April 1 that total U.S. oil production fell for the week ending on March 27, falling 36,000 barrels per day to 9.38 million barrels per day.

The prior week’s production level of 9.42 million barrels per day was the highest level in three decades. If output continues to decline, mid-March 2015 could mark the peak of U.S. oil output, at least for the foreseeable future.

That would raise the possibility that oil prices have bottomed out. Where do they go from here? Is it possible that oil prices could dip any lower? If they are indeed about to rise, will they rise quickly or stay flat for a while before gradually ascending?

There are several major determinants of oil prices one should consider.

1. U.S. Production. The first and most important thing to watch is the aforementioned levels of U.S. production. Weekly figures come out from the EIA and we should get a better sense of where U.S. oil flows are going next week. Consistent weekly drops will put upward pressure on prices.

…click on the above link to read the rest of the article…

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