US oil and natural gas rig count drops by 10 to 875

30 May 2015 | Author: | No comments yet »

Energy Sector: Largest Bullish Revisions For Q2 EPS.

Oil explorers idled rigs in U.S. fields for the 25th straight week, drawing out an unprecedented retreat in drilling that has curbed the country’s shale oil boom and helped crude prices rally. Energy firms pulled another 13 rigs from U.S. oil fields this week, the biggest drop in four weeks, data showed on Friday, showing that a near six-month slump in activity had yet to run its course despite a rebound in crude oil prices.The energy sector late last year and particular the first few months of 2015 saw a collapsing oil that just would not find a bottom, consistent downgrades and negative forward guidance revisions.

Rigs targeting oil in the U.S. declined by 13 to 646, the lowest since August 2010, field services company Baker Hughes Inc. said on its website Friday. However, in the Eagle Ford basin in South Texas, the nation’s second biggest shale oil field, drillers added one oil rig in the third weekly increase in a row, bringing the total up to 90. The market has been eyeing the U.S. rig count and the increases of a few rigs in some basins over the past few weeks ahead of next week’s meeting of the Organization of the Petroleum Exporting Countries, which is to decide on crude production levels of its 12 members.

The price of crude has rallied 3% year to date and bullish second quarter revisions to energy sector imply that crude prices could continue to stabilize and move higher. The retreat brought production growth from the nation’s biggest shale formations to a halt, suspending a boom that turned the country into the world’s biggest fuel exporter. “The major basins aren’t bleeding as much as they were, so we’re near the bottom,” James Williams, president of energy consultant WTRG Economics, said by phone from London, Arkansas, on Friday. “We should see a moderate upward move in rigs sometime next month.” U.S. benchmark West Texas Intermediate oil for July delivery jumped $2.62 Friday to end the week at $60.30 a barrel on the New York Mercantile Exchange, up 43 percent from the 52-week low of $42.03 reached March 18. The U.S. pumped 9.57 million barrels a day in the seven days ended May 22, the most in weekly Energy Information Administration data going back to 1983.

Since the number of oil rigs peaked at 1,609 in October, U.S. drillers have slashed spending, eliminated thousands of jobs and idled more than half of the country’s active rigs as U.S. crude futures collapsed 60 percent from over $107 a barrel last June to a six-year low near $42 in March. The major argument being made here is the fact that S&P 500 still trades at near high levels, while revisions continue to be in decrease-to-sideways trend. OPEC will maintain its production target when ministers meet in Vienna on June 5, according to Libya, which joined Kuwait this week in predicting no change in policy. “While the recent data suggests a bullish environment due to strong gasoline demand and decreasing crude oil inventories, potentially increasing domestic production and the OPEC meeting on Friday June 5th will certainly weigh on the wider energy complex,” strategists from Toronto-Dominion Bank including Michael Loewen wrote in a research note Thursday. “At current prices and growing tight oil production, there is little incentive for the group to cut quota.”

Goldman forecast the crude market will remain oversupplied through 2016 with U.S. producers set to increase drilling again and Saudi Arabia, Iraq and Russia on track to grow production sharply. “The longer this price decline takes to materialize, the greater the price downside given our already projected high inventories into 2016, especially in the United States,” Goldman said in the report. The next largest were QEP Resources, Inc. at 42.8% (-$0.14 from -$0.25), Apache Corporation with 39.3% (-$0.36 from -$0.59), Cabot Oil & Gas Corporation with 28.2% ($0.04 from $0.03), etc.

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