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Will Natural Gas Rig Counts and Prices Move in the Same Direction?

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Oct. 8 2015, Updated 11:06 a.m. ET

Natural gas rig count  

The weekly natural gas rig count will be released by Baker Hughes on September 25, 2015. Baker Hughes reported that the US active natural gas rig count rose by two to 198 for the week ending September 18, 2015. In contrast, the natural gas rig count fell by six to 196 for the week ending September 11, 2015. The weekly natural gas rig count rose for the third time in the last ten weeks.

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Impact 

For the week ending September 18, 2015, the total crude oil and natural gas rig count fell by six to 842. Similarly, the oil and gas rig count fell by 16 to 848 for the week ending September 11, 2015. The current crude oil and natural gas count is 1,089 less than the level of 1,931 last year. Crude oil and natural gas rigs fell due to lower crude oil and natural gas prices.

Meanwhile, the current natural gas rig count is 40% less than the level of 329 last year. Natural gas rigs fell due to lower drilling activity. The lower activity was due to lower natural prices. Prices fell to due to long-term oversupply concerns.

The fall in the natural gas rigs impacts oil drillers like Superior (SPN), Schlumberger (SLB), and Halliburton (HAL). The falling natural gas prices also impact energy ETFs like the Energy Select Sector SPDR ETF (XLE) and the SPDR Oil and Gas ETF (XOP). However, the increasing efficiency and lower drilling costs are keeping drillers busy. Natural gas production continues to outpace demand in the short term.

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