The U.S. rig count continues to creep back up slowly, up ten Feb. 17, 2017, according to the latest Baker Hughes report. The rig count has increased for 5 straight weeks, reaching 751.
The U.S. added 6 rigs exploring for oil and 4 exploring for natural gas. The current oil rig count is 597, while gas rigs number 153. One rig is still labeled as miscellaneous.
Texas, again, saw the greatest jump, with 16 new rigs. Louisiana saw a decrease of three rigs, although three of the Texas rigs added were in the Haynesville basin. The Cana Woodford dropped two rigs, and the Williston Basin declined by one.
Oil prices likely to close down this week
Oil prices, however, are likely to end the week down due to concerns about U.S. shale overproduction in the midst of OPEC cuts. MarketWatch reports:
Talk of possibly extending the [OPEC] supply cut pact come at time when U.S. production is showing a strong revival. The EIA forecasts that U.S. output to average 9 million barrels a day this year and grow another 500,000 barrels a day next year.
In the short term, Bob Silvers, managing director, in charge of energy practice at SSA & Company, a New York-based management consultancy. notes that “as long as U.S. demand/consumption is stable or slightly decreasing and OPEC maintains their current production cuts, U.S. shale production, which can continue to ramp up quickly, will keep prices relatively stable.”
In the long term, however, Silvers says inventories will need to drop and show a reversal of these factors in order to see a sustained upward trend in prices, reports MartketWatch.
Natural gas production should continue to rise
According to the U.S. Energy Information Administration (EIA), natural gas production in the Marcellus and Permain shale regions should continue to rise. The EIA’s Drilling Productivity report released February 13, 2017 estimates that U.S. natural gas production will increase across all shale regions by 524 million cubic feet per day in March.
Natural gas productivity has historically decreased since a 2008 high due to overproduction. Consequently, the oversupply has led to a decrease in prices. Natural gas currently sits at $2.85, down slightly, due partly to warmer temperatures nationwide and lower demand. A January 3-month high saw the price hit over $3.80.
The EIA (U.S. Energy Information Administration) released its monthly Drilling Productivity report on February 13, 2017. It estimates that US natural gas production will rise in the seven shale regions by 524 Mcf per day (million cubic feet) to 49,135 Mcf per day in March 2017—compared to the previous month. Production is expected to rise mainly in the Marcellus, Haynesville and Permian Shale regions during the same period.