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US Natural Gas Futures: What to Expect This Spring

PART:
1 2 3 4 5 6 7 8
Part 5
US Natural Gas Futures: What to Expect This Spring PART 5 OF 8

US Natural Gas Rig Count Hit December 2015 High

US natural gas rig count  

Baker Hughes (BHI) will release its weekly US natural gas rig count report on April 21, 2017. It reported that the rig count fell by three to 162 rigs on April 7–14, 2017. Rigs are down 1.8% week-over-week but have risen 82% year-over-year. The rig count is at the highest level since December 31, 2015.

The US natural gas rig count rose because US natural gas prices rose 59% in 2016. Higher natural gas (BOIL) (UGAZ) (GASL) 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 Rowan Companies (RDC), Transocean (RIG), Atwood Oceanics (ATW), and Diamond Offshore Drilling (DO). For more on natural gas prices, read Part 1 of this series.

US Natural Gas Rig Count Hit December 2015 High

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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. On the other hand, it hit a low of 81 rigs in the week ending August 26, 2016. Rigs were ~89.9% below their peak, but they rose 100% 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. US natural gas production has been strong despite lower natural gas prices due to the rise in US crude oil production. 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.

EIA’s monthly drilling report 

The EIA (U.S. Energy Information Administration) released its monthly Drilling Productivity Report on April 17, 2017. It estimates that US natural gas production would rise in the seven shale regions by 501 million cubic feet per day to 50,089 million cubic feet per day in May 2017—compared to the previous month. Production is expected to rise mainly in the Permian and Haynesville Shale regions during the same period.

In the next part, we’ll take a closer look at US natural gas production.

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