US rig count lower as Texas resumes slide: Baker Hughes
Quantum Commodity Intelligence – North American drilling activity resumed the year's downtrend following three consecutive weeks of modest gains, according to the latest report from oilfield services firm Baker Hughes.
The total rig count dropped by seven units to 618 the week ending 3 November, 152 rigs below the same stage last year, or down 20%, and the lowest number of working rigs since February 2022.
The oil rig count decreased by eight to 496 last week, 117 fewer than at the same stage last year, while rigs drilling for gas edged up by one to 118, which was still 37 down on the year.
Texas mostly accounted for the losses, falling seven units to 304 and giving up half the gains made in the previous three weeks, while New Mexico added four rigs for 104 total, with those two states offsetting small gains in several other states.
US crude oil production soared to a record high of over 13 million bpd in August, surpassing the previous peak set nearly four years ago.
According to the Energy Information Administration, production in August averaged 13.053 million, beating the previous record of 13 million bpd set in November 2019, prior to the sharp production decline during the 2020 Covid-19 pandemic.
Weekly production data from the EIA suggests the coming months will also set a new record, with recent figures putting output at 13.2 million bpd.
Prices
Meanwhile, US crude oil prices retreated sharply as the conflict in the Middle East has so far not disrupted oil supplies - in turn eroding the war premium.
NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday at $80.51/b for the Dec23 contract, down 5.9% on the week.
Front-month Dec23 ICE Brent futures closed at $84.89/b, down 6.2% over the same timeframe.
US natural gas posted slim gains as the Dec23 Henry Hub contract on NYMEX closed Friday at $3.515/mmBtu, up 1% with many states hit by the first blast of winter weather, while LNG exports remain elevated.
However, dry gas production remains at around record highs, while this week's milder forecasts capped further price gain.
The heavy production schedule means that day-ahead spot prices continue to trade at a discount to front-line futures, which, according to Reuters data, spot Henry Hub has traded below futures for 174 out of 210 trading days so far in 2023. In turn, this also supports the cost of carrying inventory.
