US drilling slumps as gas rigs at one-year low: Baker Hughes

Quantum Commodity Intelligence – North American drilling activity was sharply lower as the number of rigs drilling for gas tumbled by the most in seven years the week ending 12 May, oilfield services firm Baker Hughes reported.

The total weekly rig count was down by 17 units to 731, the biggest weekly drop since June 2020, when the pandemic led to a major slowdown in exploration activity. The overall count is now just 2% above year-ago levels.

Rigs drilling for natural gas were down by 16 to 141, the steepest weekly fall since February 2016, and now eight rigs lower compared to the same time last year.

The number of rigs dedicated to crude fell by two to 586, which was the lowest since last June but up 23 on the year.

Texas lost two rigs to stand at 366 units but 21 more than a year ago, while the Permian Basin, spanning West Texas and New Mexico, was down three rigs at 353 for an increase of 18 on the year.

Haynesville led the declines, dropping five rigs, while no major producing basin registered an increase.

NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday (12 May) at $70.04/b for the Jun23 contract, down 1.8% on the week.

Front-month Jul23 ICE Brent futures closed at $74.17/b, down 1.5 % over the same timeframe.

Natural gas improved slightly with the Jun23 Henry Hub contract on NYMEX closing at $2.30/mmBtu on Friday but hovering just above two-year lows.

Spot natural gas prices were again hit by mild spring temperatures and pipeline maintenance, along with plentiful supplies. The market remains in a contango structure, with the Nov23 contract closing above $3/mmBtu on Friday.