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Decline in U.S. Drilling Activity Persists

Decline in U.S. Drilling Activity Persists

Apr 12, 2024

Decline in U.S. Drilling Activity Persists

In a new report published on Friday by Baker Hughes, the total number of active drilling rigs for oil and gas in the United States has decreased, continuing a trend observed earlier this year. The total rig count dropped by 3 to 617 this week, marking a significant reduction from the 751 rigs operating at the same time last year.

Oil rigs specifically saw a decrease of 2 this week, bringing the total to 506, which is 84 rigs fewer than the count at this time last year. The number of gas rigs also fell by 1 to 109, representing a loss of 49 active gas rigs compared to last year. The count of miscellaneous rigs remained unchanged at 2.

Despite the decrease in drilling rigs, U.S. crude oil production has maintained a consistent output, holding steady at an average of 13.1 million barrels per day (bpd) for the fifth consecutive week as of the week ending April 5. This figure is slightly down from the peak of 13.3 million bpd.

Further insights from Primary Vision's Frac Spread Count, which estimates the number of crews finishing incomplete wells, indicate a decline for the third consecutive week. The number of completions fell by 3 to 257 for the week, which is 30 fewer than the same period last year.

Regionally, the Permian basin experienced a minor reduction in rigs, decreasing by 1 after a brief increase the previous week. Similarly, the Eagle Ford saw a reduction of a single rig this week, following a gain in the prior week.

In the commodities market, oil prices were trending upward on Friday morning, with an approximate gain of $2 per barrel early in the day. However, prices moderated later in the afternoon. At 12:36 p.m. ET, the West Texas Intermediate (WTI) benchmark was trading up at $85.98 per barrel, an increase of $0.96 (+1.13%) on the day but a week-over-week decrease of $1.50. Meanwhile, the Brent benchmark showed an increment of $0.90 (+1.00%) at $90.64, also down roughly $1 per barrel from the previous week.

The current state of the U.S. oil and gas industry appears to be one of cautious stability, with a slight decrease in drilling activity and steady production levels. The implications of the reduced rig count may affect future production capacity, although the immediate output remains unchanged.

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