Crude Oil Prices Add More Concerns for Gas Rigs and Prices



US natural gas rigs  

Baker Hughes, a General Electric (GE) company, will publish its US natural gas rig count report on December 8, 2017. In the last week’s report, gas rigs rose by four to 180 on November 22–December 1, 2017. The gas rig count is near an eight-week high. Rigs rose 2.3% week-over-week and by 61 rigs or 51.3% year-over-year. Rigs increased since US crude oil (DWT) (DBO) is near a 30-month high.

OPEC’s meeting  

On November 30, 2017, OPEC and major producers decided to extend the current production cuts until December 2018. Oil prices (BNO) (USO) have risen more than 30% since June 2017, partially due to production cuts. The rise in oil prices has been reflected with the rise in crude oil and natural gas rigs. US natural gas rigs rose by 14 rigs or 8.4% in the last three weeks.

Higher oil (UCO) and gas (DGAZ) prices drive oil and gas production activity. It benefits energy (IEZ) (XES) producers like EOG Resources (EOG), WPX Energy (WPX), Transocean (RIG), and Diamond Offshore (DO).

US Crude oil prices impact on natural gas rigs and prices 

US gas rigs were near the highest level since October 13, 2017. US oil prices were almost at a three-year high. Natural gas is generally an associated product of crude oil. Higher oil prices would drive the US crude oil rig count. It would also drive natural gas supplies. Any rise in US natural gas supplies will pressure natural gas prices.

Next, we’ll focus on US natural gas supply and demand.

More From Market Realist