The total number of operating rigs in the U.S. the week as of March 6th was 1,003,000 oil and 194 gas. In percentage terms, on a month on month, (m/m) basis, oil rigs were up 2.2%, (+22 rigs) and gas up 7.2% (+13 rigs). On a year on year, (y/y) comparison, rigs were up +21.7% for oil and +17.6% for gas. The combined figure was +21% or +208 rigs. This is good news for sucker rod and oil country tubular products producers.
Figure 1 shows the Baker Hughes U.S. Rotary Rig Counts for oil and gas equipment in the U.S. from 2012 to present. Oil rigs rose steadily from 316 in late May 2016 and landing at 808 this week. Gas rigs bottomed-out at 86 in August 2016 then rose steadily topping out at 194 this week, the highest it has been since November 2015.
For the week ending March 6th, Texas was operating 498 rigs (49.7% of the total), followed by Oklahoma with 126, (12.6%), New Mexico with 90, (9.0%). Louisiana had 44 on-land and 12 off-shore, (5.6%). North Dakota’s count was 54, (5.4%). These five states together account for 82.3% of the nation’s rig count.
Prices are moving up. Referencing Bloomberg Energy, West Texas Intermediate (WTI) crude oil in intraday trading was at $65.54 today. Its range over the past 52 weeks has been between $44.34 and 66.55 per barrel. Brent crude oil in intraday trading was at $70.97 per barrel today. Its 52 week range was $47.15-71.34 per barrel. Brent crude has been trending higher since its recent low of $45.22 on June 21st.
Thanks to the shale boom, new U.S. supply will cover more than half the world’s oil demand growth to 2023, the agency said. Production from the prolific Permian Basin will double over the period and the country’s total liquid hydrocarbon output will rise to 17 million barrels a day from 13.2 million last year. The American surge and a slightly weaker outlook for global demand growth make uncomfortable reading for OPEC. The IEA slashed projections for the amount of crude needed from the cartel, indicating its supply cuts would need to stay in place until 2021 to avoid creating another prolonged surplus.
At Gerdau we monitor rig counts along with the price of oil and natural gas since it has a major impact on long product sales to include Special Bar Quality sucker rods for downhole pumping strings to merchant and structural products for rigs and oilfield equipment.