US natural gas rig count
Baker Hughes released its US natural gas rig count report on November 3, 2017. The rigs fell by three to 169 on October 27–November 3, 2017. It’s the lowest level since April 21, 2017. Natural gas rigs have stalled due to lower crude oil (DBO) (USL) and natural gas (UNG) (BOIL) prices in the last few months.
So far, natural gas and crude oil rigs hit a 2017 high on July 28, 2017. Since then, natural gas rigs have fallen by 15 or 12% since July 28, 2017. However, natural gas (DGAZ) (UGAZ) and crude oil (USO) (UCO) prices have risen 1.7% and 15%, respectively, since July 28, 2017.
Crude oil prices influence crude oil and natural gas rigs
Crude oil rigs in the lower 48 states of the US follow changes in WTI (West Texas Intermediate) prices with an approximate four-month lag, according to the U.S. Energy Information Administration. Changes in crude oil (USL) and natural gas (DGAZ) prices impact drillers and producers’ (XLE) (VDE) earnings like Southwestern Energy (SWN), Transocean (RIG), and Diamond Offshore (DO).
US natural gas rigs are near a seven-month low, which suggests that natural gas rigs could fall more. However, US crude oil prices have risen ~30% since the low in June 2017. They’re at a 28-month high. Natural gas is mostly a byproduct of crude oil. Higher crude oil prices could drive US crude oil and natural gas rigs. The rise in natural gas rigs could drive US natural gas production and pressure natural gas prices.