Crude Oil and Natural Gas: Key Rig Count and Inventory Data
Gas rig count rises
Baker Hughes (BHI) reports the weekly natural rig count report on Friday. This report is scheduled to release on June 26, 2015. For the week ending June 19, the weekly gas rigs rose by two to 223. During the same period, the total oil and gas rigs fell by two to 857. Likewise, active gas rigs fell by one to 221 for the week ending June 12, 2015. Currently, total crude and natural gas rigs are 1,001 lower than the 1,858 levels in 2014. The fall in the drilling activity was due to a massive natural gas surplus and the long-term fall in natural gas prices.
The recent surge in natural gas prices could boost the confidence of crude oil and natural gas drillers. Higher gas prices mean that oil producers will spend more on the drilling activity. This is positive for oilfield service companies like Schlumberger (SLB), Baker Hughes (BHI), and Halliburton (HAL). The higher natural gas prices couldn’t be sustained longer unless the long-term demand picks up.
Despite the massive fall in natural gas and crude oil rig counts from the October 2014 peaks, the production of crude oil and natural gas hasn’t slowed down. However, natural gas production is expected to slow down in July 2015. US crude oil production will also slow down in 2H15. However, it’s expected to rise in early 2016. The short-term slowdown in production could support gas and oil prices.
The volatility in natural gas prices also impacts ETFs like the Energy Select Sector SPDR ETF (XLE) and Spider Oil and Gas ETF (XOP). These ETFs moved in the opposite direction of natural gas on Thursday. They fell by 1.02% and 0.62%, respectively, on June 25, 2015. The S&P 500 also fell in line with these ETFs on Thursday.
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