In the week ended October 30, the number of rigs drilling for oil in the United States totaled 578, compared with 594 in the prior week and 1,582 a year ago. Including 197 other rigs drilling for natural gas, there are a total of 775 working rigs in the country, down from 787 week over week and down from 1,154 year over year. The data come from the latest Baker Hughes Inc. (BHI) North American Rotary Rig Count.
Benchmark West Texas Intermediate (WTI) crude oil for December delivery rose by about $1.50 a barrel over the past five days to close the week up about 4.5% at $46.39, after rising above $47 briefly. Brent crude closed at $49.50 on Friday.
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Both Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) reported third-quarter results Friday before the markets opened. Both companies reported better-than-expected profits and revenues, but both also plan to cut capital spending, and Chevron said it would fire 6,000 to 7,000 people and aims to sell assets worth $5 billion to $10 billion by the end of 2017.
Neither company touched its dividend, but one large independent producer did. Marathon Oil Corp. (MRO) slashed its quarterly dividend from $0.21 to $0.05. The "lower-for-longer" price environment is very likely to put more pressure on independent producers, and Marathon was just the first of what could be several to take this step.
Marathon's market cap is around $12.5 billion, which puts it at the low end of the independent producers with a market value in the double-digit billions. There are six more companies with market caps below $20 billion and five are reporting results next week: Apache, Devon, Noble Energy, Concho and Continental.
The number of rigs drilling for oil in the United States is down by 1,004 year over year, and down by 16 week over week. The natural gas rig count rose by four, from 193 to 197. The count for natural gas rigs is down by 149 year over year.
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Gasoline stockpiles decreased by 1.5 million barrels again last week. U.S. refineries ran at 87.6% of capacity, a week-over-week increase of 271,000 barrels a day. Refiners have increased throughput for two consecutive weeks now, as fall maintenance and turnarounds draw to a close.
Hedge funds — under the Managed Money heading in the Commodity Futures Trading Commission (CFTC) weekly Commitments of Traders report — added 27,694 short contracts last week and 7,073 long contracts. The movement reflects changes as of the October 27 settlement date. Managed money holds 273,436 long positions, compared with 134,264 short positions. Open interest increased by 62,471 contracts to 1,676,033 week over week. The jump in open interest is essentially equal to the drop that took place over the past two settlement periods. The number of hedge funds with large short positions rose from 53 to 58 last week and is now larger than the number of funds (55) with large long positions.