By September 2, 2016 Read More →

US rig count rises for ninth week in 10: Baker Hughes

rig count

Jim Williams, an analyst at WTRG Economics says next week’s rig count could be higher, but as “we get into late September and beyond, and once it becomes clear that OPEC measures to jawbone the market won’t last”, a lower rig count is likely. Nabors photo. 

US rig count up to 497, Canadian rig count drops to 137

Sept 2 (Reuters) – The U.S. oil drilling rig count rose this week for the ninth week in ten, but the pace of additions slowed as crude prices hold below the key $50-a-barrel mark that analysts and drillers say makes drilling more viable.

The US oil rig count rose by one to reach 407 for the week ended Sept. 2, compared with 662 a year ago, data from oil services company Baker Hughes Inc showed on Friday.  In Canada, the total number of oil and gas rigs dropped by nine to 137.

The US rig count was unchanged last week. Prior to that, it grew for eight straight weeks, rising by 76 since the week ended July 1, for the most number of rig additions n a row since April 2014.

“We could have a higher count for another week or so, given the lag between oil price moves and the industry’s reaction,” said Jim Williams, analyst at WTRG Economics in London, Arkansas. “But a lower rig count is also likely once we get to late September and beyond, and once it becomes clear that OPEC measures to jawbone the market won’t last.”

The Organization of the Petroleum Exporting Countries, led by Saudi Arabia and other big Middle East crude exporters, will meet non-OPEC producers led by Russia at informal talks in Algeria between Sept. 26 and 28 to discuss a freeze output. If that fails, OPEC is expected to continue trying to prop up the market going into its policy meeting in Vienna on Nov. 30.

On Friday, U.S. West Texas Intermediate (WTI) crude futures rose 3 percent, hovering above $44 a barrel, helped by a weaker dollar and comments by Russia supporting a production freeze. Despite rebounding this year, oil trades at less than half of mid-2014 peaks above $100 a barrel. WTI is also about $6 a below the 2016 peak of $51.67 hit in June, a level that began bringing drillers steadily back to the well pad.

Few analysts believe OPEC will be successful in making price gains last, especially when the biggest crude exporters such as Saudi Arabia and Iran are pumping all they could in a fight to raise market share. They think prices will come under pressure from renewed worries over an oil glut. U.S. government data on Wednesday showed a 2.3 million-barrel build in crude inventories in the last week, more than double what the market had expected.

The rig count is one of several indicators of future oil and gas production. Other indicators include drillers ability to get more out of each well and the completion of drilled but uncompleted wells or DUCs.

(Reporting by Barani Krishnan; Editing by Marguerita Choy)
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