US Natural Gas Rig Count at Its Highest since December 2015
US natural gas rig count
Baker Hughes (BHI) is releasing its weekly US natural gas rig count report on April 7, 2017. From March 24–31, 2017, the rig count rose by five to 160 rigs. It rose 3.2% week-over-week and 81.8% year-over-year. The rig count was at its highest level since December 31, 2015.
Rigs rose because US natural gas prices rose 59.0% in 2016. Higher natural gas (BOIL) (UGAZ) (UNG) prices will have a positive impact on drilling activity in 2017. The rise in drilling activity has a positive impact on oil and gas drillers such as Atwood Oceanics (ATW), Rowan Companies (RDC), Transocean (RIG), Schlumberger (SLB), and Diamond Offshore Drilling (DO). For more on natural gas prices, read Part 1 of this series.
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Peaks and lows in natural gas rigs
The US natural gas rig count peaked at 1,606 rigs on September 12, 2008. It hit a low of 81 rigs in the week ended August 26, 2016. US natural gas rigs are ~90.0% below their peak, but they’ve risen 97.5% from their lows.
US natural gas drilling activity fell due to lower natural gas (DGAZ) (FCG) prices, while natural gas prices fell due to oversupply. Natural gas production has been strong despite lower natural gas prices due to the rise in US crude oil output. Natural gas is often an associated product of crude oil. So natural gas production and prices have been more closely related to US crude oil rigs than to natural gas rigs.
President Trump’s impact
Successful implementation of President Trump’s proposed energy policies could increase US oil and gas drilling activity. It would be reflected by higher active rigs. The rise in drilling could mean higher production.
Let’s move on to the next part of this series where we’ll take a closer look at US natural gas production.