Will US Natural Gas Rig Counts Recover?
US natural gas rig count
Baker Hughes (BHI) is scheduled to release its weekly US crude oil and natural gas rig count report today. In the previous week’s report, Baker Hughes reported that the US natural gas rig count rose by four to 190 between September 15 and 22.
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Crude oil rig counts impact natural gas
Natural gas is often a byproduct of crude oil. US crude oil rigs have risen by 428 or 135% from their low in May 2016. The US crude oil rig count had risen due to the rise in crude oil prices in 2016. Brent and US crude oil (USO)(UCO) futures are at multi-month highs.
Higher crude oil (UWT)(DWT) and natural gas (DGAZ)(GASL) prices could drive US drilling activity and spur natural gas production. Higher drilling and production can have a positive impact on drillers and producers’ (XLE)(VDE) earnings, including Diamond Offshore (DO), Rowan Companies (RDC), Gulfport Energy (GPOR), and Schlumberger (SLB).
Monthly international natural gas rig count
Baker Hughes’s international oil and gas rig count doesn’t include data from the United States and Canada. It estimates that international natural gas rigs fell by one to 200 in August 2017 compared with the previous month. International natural gas rigs fell 0.5% month-over-month and 0.5%, or by one rig, year-over-year.
The number of active US natural gas rigs is at a nine-week high. The number of active oil and gas rigs could rise if crude oil and natural gas prices trade firm. However, rising rigs could bring more supply to the market, which would pressure prices.
In the next part of this series, we’ll discuss how US natural gas production and consumption impact prices.