In the week ended August 14, the number of rigs drilling for oil in the United States totaled 672, compared with 670 in the prior week and 1,589 a year ago. Including 212 other rigs mostly drilling for natural gas, there are a total of 884 working rigs in the country, flat week-over-week, and down 1,029 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 dropped to $42.16 a barrel in overnight electronic trading Thursday, its lowest level in the past six years. By afternoon crude had climbed back to around $43.30, only to be felled again by the rig count report before settling at $42.74 for the day. Earlier in the week, the U.S. Energy Information Administration (EIA) updated its Short-Term Energy Outlook by lowering the agency’s estimated 2015 average price for Brent crude oil by a whopping $6.00 to $54.40 a barrel and lowered its estimate for the average WTI barrel to $49.62, from last month’s forecast of $55.51 a barrel. The EIA now forecasts the Brent crude price to average $59.42 a barrel in 2016, down $7.62 a barrel from the June estimate. The WTI price is forecast to average $5 a barrel below the Brent price.
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The pressure on OPEC and, particularly Saudi Arabia, is getting intense. The Saudis have already issued $5 billion in government bonds with plans for more bond sales as they try to balance a government budget based on a crude oil price of around $100 a barrel instead of $54 a barrel, the price of a barrel of OPEC’s reference basket in July. The Saudis have a stash of nearly $750 billion in the country’s sovereign wealth fund, but the International Monetary Fund recently estimated the Saudi government would run a fiscal deficit of $150 billion in 2015. At that rate the sovereign wealth fund will last just five years -- and there is little reason to believe that American shale producers are all going to cave in over the next five years.
U.S. refineries were running at just over 96.1% of capacity again last week, equaling a 10-year high again, with daily input of about 17 million barrels a day, just 46,000 barrels a day less than the previous week. Imports rose sharply last week to around 7.6 million barrels a day, about 393,000 barrels a day more than the prior week.
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The number of rigs drilling for oil in the United States is down by 917 year over year, but rose by two week over week. The natural gas rig count decreased by two to a total of 211. The count for natural gas rigs is down by 110 year over year.