US rig count up for 22nd straight week, but pace slowing: Baker Hughes

US rig count up to 747

Data released by Baker Hughes on Friday shows the US rig count increased for the 22nd straight week, but the energy services firm adds the pace of additions has slowed as crude prices dropped to 2017 lows.

In the week ending June 16, US drillers added six oil rigs, bringing the count up to 747, the highest since April 2015.  This time last year, there were 337 rigs.

In Canada, the rig count jumped by 27 and now stands at 159, which is 90 more rigs than at the same time in 2016.

US crude futures traded near a seven-month low at around $44.70/barrel on Friday, putting the front-month on track to decline for the fourth consecutive week.  This despite OPEC’s efforts to reduce the global crude glut that has impacted the market since 2014.

A report issued by the International Energy Agency earlier this week said 2018 growth in oil supply is expected to outpace the anticipated increase in demand that is estimated to push consumption to over 100 million b/d for the first time ever.

In the US, shale drillers have been forced to reduce their hedges, leaving them vulnerable to falling oil prices.

At the same time, eight prominent hedge funds have reduced the size of their positions in ten of the top Permian shale firms by over $400 million.  According to Reuters, the firms are concerned the shale producers are pumping oil so fast they will undo the nascent recovery in the industry.

Despite the gloomy outlook, US shale production is expected to rise for a seventh consecutive month in July, according to the US Energy Information Administration.

Output from North Dakota was up by 2 per cent in April.

Futures for the remainder of 2017 were trading at around $45/barrel, while calendar 2018 was at about $47/barrel.