US rig count declines for sixth consecutive week: Baker Hughes

Quantum Commodity Intelligence – North American drilling activity slumped to a 17-month low, dropping for a sixth consecutive week, oilfield services firm Baker Hughes reported.

The total rig count fell by five units to 642 the week ending 18 August, which is 120 rigs below the same stage last year, or down 16%, with the number of working rigs posting a 15th loss out of the last 16 weeks

Oil rigs dropped five units to 520, 81 fewer than at the same stage last year and the lowest since February 2022, while rigs drilling for gas fell by six to 117, 42 fewer on the year.

Texas steadied after five weeks of declines, reported unchanged at 312 but 57 lower than a year ago, while the Permian Basin, spanning West Texas and New Mexico, was also flat at 327, although 18 down from year-ago levels.

Rig losses were spread around other production basins, including North Dakota, Ohio, Oklahoma, Louisiana and West Virginia.

Shale

US shale oil output likely hit a fresh post-Covid high in July but is set to pull back through August and September as producers rein in drilling even as crude oil prices have rallied to nine-month highs.

The monthly US Drilling Productivity report, released last week, called July shale oil output at 9.45 million bpd, a 0.6% rise on the month and the highest monthly shale output on record.

July's rise was led by output from the Bakken field in North Dakota and Montana, which was up around 0.7% on the month to a record 1.2 million bpd.

NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday at $81.25/b for the Sep23 contract, down 2.3% on the week.

Front-month Oct23 ICE Brent futures closed at $84.80/b, also down 2.3% over the same timeframe.

US natural gas was lower over the week as the Sep23 Henry Hub contract on NYMEX closed at $2.55/mmBtu for a 8% loss, with domestic demand easing as temperatures cool following the summer heatwave.