uploads/2015/10/NG-rig-count71.png

Will the Natural Gas Rig Count Rise for the Third Week in a Row?

By

Updated

Natural gas rig count

On October 30, 2015, Baker Hughes (BHI) published its weekly US natural gas rig count report. Baker Hughes reported that the natural gas rig count rose by one to 193 for the week ending October 23, 2015.

Similarly, the natural gas rig count rose by three to 192 for the week ending October 16, 2015. The natural gas rig count rose for the third time in the last ten weeks.

Article continues below advertisement

Why the natural gas rig count fell

The US natural gas rig count fell due to the mammoth fall in natural gas prices. Natural gas prices fell due to oversupply concerns. As a result, drilling activity fell by 40%, from 328 in 2014 to 193 in 2015.

Falls in drilling activity impact drillers such as Baker Hughes (BHI), Schlumberger (SLB), Noble (NE), and Halliburton (HAL). They also impact oil and gas ETFs such as the PowerShares DB Energy ETF (DBE) and the iShares US Oil Equipment & Services ETF (IEZ).

Will the natural gas rig count fall further? 

Natural gas prices fell almost 20% in October 2015. The bearish trend of natural gas prices suggests that the natural gas rig count could fall further. The fall in natural gas rigs could impact natural gas production in the long-term.

However, the EIA (U.S. Energy Information Administration) forecast that natural gas production could increase over the long term. Improvement in productivity, better planning, and lower drilling costs have led to an increase in natural gas production. This means a higher supply of gas and lower gas prices as a result.

Advertisement

More From Market Realist