US natural gas rig count 

Baker Hughes (BHI) is scheduled to release its weekly US natural gas rig count report on June 10, 2016. The active weekly US natural gas rig count fell by five rigs to 82 rigs for the week ending June 3, 2016—compared to the previous week. The rig count fell by 5.7% week-over-week. It fell by 63.1% year-over-year. The trend could continue this week.

Will the US Natural Gas Rig Count Fall Again This Week?

Peaks and lows 

The US natural gas rig count peaked at 1,606 rigs on September 12, 2008. In contrast, it hit a new low of 82 rigs in the week ending June 3, 2016. This was the lowest level in the last 29 years. US drilling activity fell due to lower natural gas prices. Natural gas prices fell due to oversupply. For the latest on natural gas prices, read the first part of this series.

EIA’s monthly drilling report 

The EIA (U.S. Energy Information Administration) is scheduled to release its monthly drilling report on June 13, 2016. In the previous month’s report, it estimated that natural gas production in the seven major shale regions would decline in June 2016—compared to the previous month. Production is estimated to fall by 464 MMcf (million cubic feet) per day to 45,972 MMcf per day for the same period.

The fall in drilling activity has a negative impact on oil drillers and oil producers such as Rowan Companies (RDC), Diamond Offshore (DO), Atwood Oceanics (ATW), and Transocean (RIG). The fall in the drilling activity also impacts natural gas production. We’ll analyze this in Part 5 of this series. 

Impact on ETFs  

Volatility in natural gas prices impacts ETFs and ETNs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the United States Natural Gas Fund (UNG), and the VelocityShares 3x Inverse Natural Gas ETN (DGAZ).

In the next part of this series, we’ll take a look at the U.S. Commodity Futures Trading Commission’s “Commitments of Traders” report.

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