US drill rig count shrinks for sixth week: Baker Hughes

Quantum Commodity Intelligence – North American drilling activity shrunk for a sixth consecutive week, something not seen since the summer of 2020, oilfield services firm Baker Hughes reported.

The total weekly rig count eased by just one unit to 695 the week ending 9 June, down 38 year-on-year, while registering the lowest tally since April 2022.

The number of rigs dedicated to crude actually increased by one to 556, but still 24 fewer than at the same stage in 2022. Rigs drilling for natural gas eased two units to 135, the lowest since March 2022.

Texas dropped another six rigs to stand at 347, down nine from a year ago, while the Permian Basin, spanning West Texas and New Mexico, lost two rigs to stand at 346 and up just one from year-ago levels.

Despite the continued fall in rig activity, US producers pumped an additional 200,000 bpd as oil firms focus on higher-yielding basins. According to latest EIA figures, US production reached 12.4 million bpd in early June, the highest since April 2020.

NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday (9 June) at $70.17/b for the Jul23 contract, down 2.2% on the week.

Front-month Aug23 ICE Brent futures closed at $74.79/b, down 1.75% over the same timeframe.

Meanwhile, natural gas prices edged higher, with the Jul23 Henry Hub contract on NYMEX closing at $2.25/mmBtu on Friday, up 5% as summer demand kicks in, but still close to two-year lows.

"The recent sharp drop in the rig count is consistent with our expectation that producers will continue to respond to low gas prices by cutting investment," said Goldman Sachs in client note last week.