The Baker Hughes rig count rose to 756 this week, with a gain of 7 rigs exploring for oil and gas. The U.S. gas rig count dropped by 5, according to data from Baker Hughes March 3.
According to Business Insider, WTI crude oil futures are headed for a weekly loss of 1.5%, following data from the Energy Information Administration on Wednesday that showed inventories rose for the eighth straight week in a row by 1. 5 million barrels. U.S. oil inventories are “at the higher end of the average range for this time of year,” said the EIA.
Crude prices are up due to OPEC’s continued production cuts but still risk a drop due to new shale drilling. Principal players in the oil market from Saudi Arabia, Russia, Brazil, Mexico and the US will meet next week for the annual CERAWeek energy conference. Shale drillers, especially those in the Permian Basin, can profit at $40 oil because of advances in drilling. Helena Croft, head of global commoditites strategy at RBS, told CNBC:
I think OPEC is hoping that this remains largely a Permian story. … That a lot of the cost deflation we saw will rise as prices rise. Service companies will again charge more. There’s a sort of uncertain equilibrium they have to deal with in U.S. production. They hope it will remain largely Permian, but it could get away from them and require deeper cuts. I don’t think the problem is compliance within OPEC, because the Saudis will do what it takes.
Oil closed today at $53.24, up 1.2 percent. Brent crude closed at $55.81, up 1.33 percent. Natural gas was also up 0.75 percent to close at $2.825.