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Why Did Natural Gas Prices and the Rig Count Fall?

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Natural gas rig count 

On August 28, 2015, Baker Hughes will release the weekly natural gas and crude oil rig count data. The weekly US natural gas rig count fell by one to 210 for the week ending August 21, 2015, according to Baker Hughes’ estimates. Likewise, the natural gas rig count fell by two to 211 for the week ending August 14, 2015. The active US gas rig count fell for the sixth time in the last ten weeks.

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Impact

The total crude oil and natural gas rig count rose marginally by one to 884 for the week ending August 21, 2015—compared to the previous week. The total US active rig count is 1,011 lower than the level of 1,896 last year. This means that natural gas rigs are 53% lower than the levels in 2014. The crude oil and natural gas rig count fell due to the catastrophic fall in crude oil and natural gas prices. The prices fell due to oversupply concerns.

Currently, the natural gas rig count is 36.30% below the level of 330 rigs in 2014. Falling natural gas prices are negatively affecting the US drilling activity. They also affect oil equipment companies like Superior (SPN), Schlumberger (SLB), and Halliburton (HAL).

Energy ETFs like the Energy Select Sector SPDR ETF (XLE) and the SPDR Oil and Gas ETF (XOP) are also influenced by falling natural gas prices. These ETFs moved in the opposite direction of natural gas prices in yesterday’s trade. They rose by 4.95% and 6.45% at the close of trade on August 27, 2015.

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