The total number of operating rigs in the US the week ending June 16th was 933, 747 oil and 186 gas. Month on month oil rigs were up 27 or 0.8% and gas rigs were up 6 or 3.3%, for an overall increase of 32 or 3.6%. This makes 22 weeks in a row of increasing rig count, the longest uninterrupted stretch of growth in three decades, according to data from Baker Hughes Inc.

On a year on year (y/y) comparison, rigs have more than doubled, up 410 or 121.7% for oil and up 100 or 116.3% for gas. The combined figure was higher by 509 rigs or up 120.0%.

rig-count-fig1Figure 1 shows the Baker Hughes US Rotary Rig Counts for oil and gas equipment in the US from 2012 through June 16th. Despite the recent rise to near 1,000, the rig count remains much lower than the 1,500 to 2,000 range enjoyed during the 2013 to 2015 time-frame.

The trajectory for growth has been far stronger for oil than for gas. Referencing Bloomberg Energy, Natural gas fell from high of $3.33 per MMBtu 15.3% on May 22nd to less than $3.00 per MMBtu today ($2.89). The 52 week low was $2.59 per MMBtu.

West Texas Intermediate crude oil price (WTI), has drifted lower over the past 4 weeks, from a high of $52.47 per barrel (br) to a low of $44.46. Today’s intraday price was $44.90 per br. Brent crude oil has followed the same downward trend ranging from $54.15 to $46.92 per br with an intraday price today of $47.60 per br. Oil prices have now reached a 7 month low. OPEC is continuing with its plan to reduce supply, gambling that global demand will pick-up in the third and fourth quarters and push prices higher. Meanwhile U.S. drillers’ continue adding rigs as Libya raised output, hammering OPEC-led efforts to re-balance an oversupplied world market.

Figure 2rig-count-fig2 shows the North American rig count by basin. The largest rig count is in the Permian basin with 368 rigs. The Permian basin also exhibits the strongest growth trajectory. The Permian rig count was 142 a year ago, up 159% y/y. The Permian basin is located in Texas It reaches from just south of Lubbock, to just south of Midland and Odessa, extending westward into the southeastern part of New Mexico. The next largest basin by rig count is the Eagle Ford basin with 84 rigs, up from 29 or 190% y/y. The Eagle Ford basin is located in South Texas running along the U.S.-Mexican border north of Laredo in a narrow band extending northeast for several hundred miles to just north of Houston.