Crude Falls 9% – Rig Count Spikes
November 5, 2016 ✰ Energy Update ✰
The American Petroleum Institute (API) reported on Tuesday a large 9.3 million barrel build in the U.S. crude oil supplies, well above the 1.6 million-barrel build expected by analysts. To make things worse, a day later, the report by the Energy Information Administration (EIA) showed that the build was much larger at 14.4 million barrels. The crude oil build was the largest in the 34-year history of the weekly inventory data provided by the Department of Energy.
The steep rise in the crude inventory last week was most likely caused by a spike in imports, which rose by 9 million barrels while refinery runs were lower, week over week and maintenance continues. The import spike is almost certainly temporary and should decrease over the next few weeks as refineries come back online.
Crude finished down over 9% for the week. The major catalysts this week for falling oil prices were doubts over an OPEC deal and the EIA data showing a record build-up in crude inventory.
West Texas Intermediate (WTI) crude oil for December delivery traded down on Friday to settle at $44.00, while January Brent crude prices closed at $45.58 a barrel.
✰The regional benchmark Plains-West Texas Intermediate Posting ended Friday at $40.50 per barrel.
The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. rose by 54 billion cubic feet in the week ended October 28, just below market expectations for an increase of 56 billion cubic feet.
Natural gas futures were down this week as warmer-than-average weather in key gas-consuming regions in the U.S. ignited speculation that a mild winter will curtail demand for the heating fuel and leave a glut of it in storage, thereby bringing down prices next year. Natural gas futures for delivery in December on the New York Mercantile Exchange closed the week at $2.781 per MMBtu.
RIG COUNT – US Total +12, Now at 569
☞For an interactive experience, jump over to the Oklahoma Index and visit our proprietary dashboard containing a compilation of this weeks rig data from Baker Hughes.
US oil rig counts were up on strong growth in the Permian Basin, after declining in the prior week for the first time in nearly four months, according to Baker Hughes (BHI) data released on Friday. Oil rigs have now risen in 20 out of the last 23 weeks.
The number of gas rigs also increased, up by 3 this week.
By state, Texas was the biggest winner this week, with a 6 rig increase. For Texas, this brings the total oil and gas rig count to 262, which is 78 below this same time last year.
The Permian has 83 percent of all rig activity in Texas and 38 percent of the nation’s. Midland County, this week unchanged at 33 rigs, holds 15 percent of Permian activity, 13 percent of Texas’ and 6 percent of the nation’s.
Other counties with double-digit rig counts in the Permian this week were Reeves (27); Martin (22); Lea, New Mexico (17); Loving (17); Eddy, New Mexico (14); Howard (11); Culberson (10); and Upton (10).
Louisiana and North Dakota increased by two each and Colorado added one. Alaska declined by one and Arkansas, California, Kansas, New Mexico, Ohio, Pennsylvania, Utah, West Virginia and Wyoming were unchanged.
In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 218, up by six compared with the previous week’s count. The Eagle Ford Basin in south Texas has 35 rigs in operation, up two week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 37 working rigs, up five for the week.
Oklahoma Rig Count at 76 – Making a Comeback in the 4th Quarter
✰74 HZ Rigs (+3this week) and2 Vertical Rigs (same as last week)
Behind Texas, the next largest gainer by state was Oklahoma, which grew by 3 rigs. The count is up 22 from the low of 54 back in June and down 12 from the high of 88 in January.
Oklahoma had a few new counties appear on our weekly summary, Beckham, Caddo, and Garfield each had one new rig running while Logan County lost the one rig it had turning to the right.
Oklahoma’s STACK and SCOOP plays continue as the few bright spots where drilling activity remains consistent. Blaine County is now up to 16 rigs running, Grady with 14 and Kingfisher comes in with 11 again.
We take a quick look this week to Eastern Oklahoma and the Arkoma Basin.
The Arkoma has seen some decline over the years in rig counts but nonetheless, Coal and Hughes Counties have maintained a decent number of rigs drilling. It is dry gas but with lots of liquids and a high BTU count, it still has plenty of suitors lined up for exploration. The main group of operators has consisted of BP, Newfield, Bravo, Canyon Creek, Petroquest, Calyx, Pablo, Silver Creek and a little activity from XTO, all drilling HZ wells to test primarily the Miss, Woodford, and Hunton commons sources of supply.