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

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US natural gas rig count  

Baker Hughes (BHI) will release its weekly US natural gas rig count report on July 28, 2017. Baker Hughes reported that the US natural gas rig count fell by one or 0.5% to 186 rigs on July 14–21, 2017. Rigs fell for the third time in five weeks. The bearish momentum could lead to a slowdown in natural gas rigs this week too.

However, the natural gas rig count rose 111.4% from the same period in 2016. Rigs rose due to the rise in natural gas (UNG) (GASL) (BOIL) prices in late 2016.

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Peak and low 

Natural gas is a by-product of crude oil. US crude oil rig counts have risen 141.7% since the lows in May 2016. The US crude oil rig count hit 316 in May 2016. It’s the lowest level since the 1940s. In contrast, the rig count hit 1,609 in October 2014—the highest level ever.

The rise in US crude oil rigs will add to US natural gas supplies. Moves in drilling activity impacted drillers like Schlumberger (SLB), Transocean (RIG), Halliburton (HAL), and Diamond Offshore (DO).

Why would US oil and gas drilling activity rise in 2017? 

The key factors that could drive drilling activity are mentioned below:

  • US natural gas production in the seven shale regions could rise by 837 Mcf (million cubic feet) per day in August 2017—compared to July 2017.
  • President Trump’s energy plans could be a factor.
  • Technological advancement could impact drilling activity.
  • Drilling efficiency might impact drilling activity.
  • OPEC’s production cut deal could help rebalance the oil market. It would support crude oil prices and US crude oil production.

All of these factors would likely drive production and lead to oversupply.

In the next part, we’ll discuss US natural gas production and consumption.

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