Rig Count Decline Pace Slows for Third Consecutive Week; Storage Additions Continue

Rig Count Decline Pace Slows for Third Consecutive Week; Storage Additions Continue

27th March 2015

The Baker Hughes U.S. onshore rig count continued its decline this week, falling by 18 rigs compared to drops of 39 and 64 for the prior two weeks.  This week’s drop of 18 rigs is the smallest week-on-week drop of 2015.  The rig count has now declined by 862 (46%) from a November 2014 high of 1,876, to 1,014 on 27 March 2015.  Rigs active in the Gulf of Mexico dropped 2 (both oil focused) compared to last week’s drop of 11, bringing the total to 33.

Rig counts in the three major oil producing basins were relatively constant, with a total drop of 5 rigs in the Permian Basin, Eagle Ford and Williston Basin (Bakken).  The Permian Basin dropped only 2 rigs this week vs. a decline of 19 and 22 the prior two weeks bringing the total active rig count to 290 vs. the 2014 high of 562 (drop of  48%).  The Eagle Ford dropped 1 rig vs. declines of 8 and 3 in the prior 2 weeks leaving a total of 137 active rigs.   The Williston Basin dropped 2 rigs compared to drops of 5 and 4 for the prior two weeks with 97 active rigs.  All three basins currently sit at their lowest active rig counts since pre-2011.

Changes this past week place the GCA Index for U.S. onshore rigs at 56, 51 points down on the 2014 high and 1 point down from the previous week.  The onshore rig count index decrease has now essentially tracked the 2008-9 since the beginning of February.  Oil rig indices for the Permian and Williston Basin both dropped 1 point, while the Eagle Ford gained 1 point due to 2 oil focused rigs becoming active.

U.S. oil inventories continued increasing to record levels of 467 million barrels as of 25 March 2015 (up 9 million barrels on prior week) according to the EIA.   However, the crude inventory addition at Cushing, Oklahoma did see a 1 million barrel weekly drop at an increase of 1.9 million barrels vs. 2.9 million barrels the week prior.  Refineries are currently operating at 89% of capacity, averaging 15.5 million barrels per day of input.  The price of WTI increased 10% week-on-week to approximately US$ 50/Bbl. The Brent-WTI spread decreased over US$ 2/Bbl to around $8/Bbl as of close of business Friday, with Brent closing at US$ 57/Bbl, a US$ 2/Bbl increase week-on-week.  

Authors

Rig Count Decline Pace Slows for Third Consecutive Week; Storage Additions Continue

Neil Abdalla

Senior Professional, Geoscientist - neil.abdalla@gaffney-cline.com
Rig Count Decline Pace Slows for Third Consecutive Week; Storage Additions Continue

Bob George

Global General Manager - bob.george@gaffney-cline.com
Rig Count Decline Pace Slows for Third Consecutive Week; Storage Additions Continue

Cecilia Jing Cui

Consultant, Petroleum Economist - cecilia.cui@gaffney-cline.com

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