Natural gas rig count rises
On June 19, 2015, Baker Hughes (BHI) reported that the weekly active natural gas rig count rose by two to 223 for the week ending June 19, 2015. In contrast, natural gas rigs fell by one to 221 for the week ending June 12, 2015. The total active natural gas and crude oil rig count fell by two to 857 for the week ending June 19, 2015. The current rigs are 1,001 lower than the 1,858 oil and gas rigs in 2014.
The massive natural gas supply surplus led to falling natural gas prices over the past year. Lower natural gas prices impacted the drilling activity. Lower drilling activity is negative for oilfield services companies like Schlumberger (SLB), Baker Hughes (BHI), and Halliburton (HAL).
The natural gas rigs are 88 rigs lower than the level of 311 in 2014. The consensus of rising demand and warmer weather could support natural gas prices. Higher natural gas prices are positive for oil and gas exploration and production companies. As a result, they will boost oil and gas drilling activity. This is positive for oilfield services companies in the long term.
Oil and gas ETFs like the Energy Select Sector SPDR ETF (XLE) and Spider Oil and Gas ETF (XOP) diverged from the price direction of natural gas on Friday. They fell slightly by 0.94% and 1.26%, respectively, on June 19, 2015. The S&P 500 also fell in line with these ETFs on Friday.