US rig count steady, oil gains offset by gas retreat: Baker Hughes
Quantum Commodity Intelligence – North American drilling activity eased for a third consecutive week, albeit marginally, with gas rigs accounting for the losses, according to the latest report from oilfield services firm Baker Hughes.
The total rig count dipped by just one to 620 in the week ending 5 April, leaving the count 131 rigs below the same stage last year but little changed since the start of 2024.
Rigs drilling for oil increased by two, standing at 508 units, 82 fewer than at the same stage last year. Rigs drilling exclusively for gas were down two at 110, but a figure 48 fewer than year-ago levels, with drillers cutting nearly a third of gas rigs over the past 12 months.
The small category of rigs classed as miscellaneous eased by one unit.
Texas, the largest-producing state, added a healthy seven units to stand at 297, but this was offset by losses in New Mexico (-3) and Louisiana (-2), while minor producer California lost half of its drill rigs to stand at just three.
The Permian Basin, spanning West Texas and New Mexico, added one unit to stand at 317, while the Haynesville gas play lost another two rigs to stand at 34 for a drop of 48% on the year. The Marcellus gas basin was unchanged at 30, down 25% on the year.
Marcellus, Permian and Haynesville accounted for over 60% of US dry natural gas production in 2023.
Canada
Meanwhile, Baker Hughes calculated Canada dropped another 15 rigs to stand at 136 units, coming on top of the 18 rigs lost in the previous week as the seasonal turnaround continued.
"The latest weekly downturn for oil and gas rigs is part of the annual spring "break up" period, a seasonal slowdown in activity associated with the end of the winter drilling season when ground conditions begin to thaw and which slows or prevents the movement of large heavy equipment such as drilling rigs," said RBN Energy.
RBN previously noted that the turnaround period typically impacts the oil rig count much more than gas rigs.
Prices
Crude maintained the solid start to 2024, with NYMEX WTI trading on the Chicago Mercantile Exchange closing Friday at $86.91/b for the May24 contract, a gain of 4.5% on the week.
Front-month Jun24 ICE Brent futures settled at 91.17/b, up 4.8% on the week, having already gained over 13% in the Q1 period.
Natural gas prices again struggled, with only marginal gains recorded with 2024 production cuts yet to bite.
The May24 Henry Hub contract on NYMEX ended the week 1.4% up at $1.79/mmBtu, while prices at the Waha hub, where spot Permian gas is priced, continued to flip between negative and positive values.
According to calculations from analytics company LSEG, production from the Lower 48 states continued to ease, dipping to an average of 99.1 billion cubic feet per day (bcfd) during the first week of April, down from 100.8 bcfd in March and the record monthly high of 105.6 bcfd in December.
