After ten weeks of gains, the U.S. rig count from Baker Hughes shows a decrease of six since last week, dropping from 665 to 659. However, the total is still up 9 from last year at this time when the count was 650.
Colorado, North Dakota, Ohio, and Pennsylvania each lost one rig. Oklahoma and Texas were each down two while Wyoming added two new rigs. Louisiana also gained one. The Permian Basin still holds strong as the greatest area of oil and gas exploration, maintaining 268 rigs in the basin.
Canada and the Gulf of Mexico both increased, with one offshore rig added in the Gulf and 110 new rigs exploring for oil and Gas up north.
John Kemp, Reuters market analyst, notes that oil price forecasts for the next few years have increased, however, as risks fall. Kemp based his analysis on a questionnaire emailed to approximately 5,000 energy market professionals, with 1,000 responses. Expectations about price are slightly above the Energy Information Administration Short-Term Energy Outlook, released earlier this week. Kemp’s survey showed energy market professionals expect 2018 Brent prices to average between $60-$65 per barrel and reach $70 by 2020. Kemp also notes that 24 percent of those who were surveyed are directly involved in oil and gas production. The other respondents come from banking and finance, hedge funds, research, professional services and physical trading.
Currently, the price of WTI crude oil sits at $53.53 at 12:52 pm CST, down 0.48. Brent crude is also down slightly at $55.61. Jillian Ambrose of the Telegraph suggests that oil’s slight drop is due to “niggling concerns over OPEC’s plans to cut supply punctured growing market optimism.” This is despite Saudi Arabia exceeding production cuts, producing less than 10 million barrels of oil a day in order to absorb increases by Libya who is exempted from the OPEC deal.
The price of oil, including the forecast, affect the rig count. As confidence in the oil market returns, the rig count is expected to increase as well, although few believe the count will reach 2014 highs anytime soon.