US: Baker-Hughes Rig Count


Fri Jun 23 12:00:00 CDT 2017

Actual Previous
N. Amer. Rig Count 1111 1092
U.S. 941 933
Gulf of Mexico 21 21
Canada 170 159

Highlights
The Baker Hughes North American rig count is up 19 rigs in the June 23 week to 1,111, the eighth consecutive weekly increase though more modest than the outsized 44 and 33 rig gains seen in the prior two weeks. The U.S. rig count is up 8 to 941 and is up 520 rigs from last year in this period. The Canadian count is up 11 rigs from last week to 170 and is up 94 from last year.

For the U.S. count, rigs classified as drilling for oil are up 11 to 758 while gas rigs are down 3 to 183. For the Canadian count, oil rigs are up 7 to 98 and gas rigs are up 4 to 72.

The steadily growing Baker Hughes U.S. rig count this year and the return of Canadian drillers since the end of the Spring Breakup hiatus in late May have both contributed to downward pressure on oil prices, along with large U.S. inventories, depressed demand and increasing domestic production. But this week's slowdown of the acceleration of rig count gains could be signaling that plunging oil prices, down almost 20% in less than a month and trading below $43.00 per barrel, are too low to be profitable for some drillers.

Definition
The Baker Hughes North American rig count tracks weekly changes in the number of active operating oil & gas rigs. Used for drilling wellbores for wells that may eventually produce oil or gas, active rigs are essential for the exploration and development of oil and gas fields. Rigs that are not active are not counted. Components in the data are the United States and Canada with a separate count for the Gulf of Mexico (which is a subset of the U.S. total). The count includes only rigs that are significant users of oilfield services and supplies.

Description
Changes in rig counts point to changes in the supply of oil & gas. The higher the rig count, the greater the upward pressure is on oil & gas supply and in turn the greater the downward pressure is on oil & gas prices. The reverse applies when rig counts turn lower, as they did during the oil price collapse of 2014-15 when lower counts contributed to a subsequent decline in domestic oil inventories. Data on the Gulf of Mexico offer indications on production disruptions during the hurricane season (June 1st to November 30th).