US oil rig count slumps after weeks of modest growth

31 Aug 2015 | Author: | No comments yet »

MarketsUS drillers increase rig count for sixth week.

HOUSTON (AP) — Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. this week declined by eight to 877. Ahead of the release, West Texas Intermediate, the US oil benchmark, jumped 6.8 per cent to $45.47 a barrel, while Brent crude, the global oil standard, climbed 6 per cent to $50.51 a barrel. This is a decrease of 8 rigs when compared to last week, with oil rigs up 1 to 675 rigs, gas rigs down 9 to 202 rigs, and miscellaneous rigs unchanged at 0 rigs.

Oil prices surged Thursday as traders who had bet on lower prices closed out those positions following positive U.S. economic data, news that some Nigerian exports would be halted and a report that Venezuela wanted an emergency meeting of the Organization of the Petroleum Exporting Countries to respond to low prices. The rally comes after concerns about China’s economy, coupled with persistently high oil output from the U.S. and OPEC, the 12-nation oil cartel, has soured investor sentiment recently. The active rig count acts as a leading indicator of demand for products used in drilling, completing, producing and processing hydrocarbons.” Baker Hughes released its latest rig count on Friday.

Weak oil prices are the primary driver behind slow growth in American rigs, and producers will need to see a significant bump to make drilling new wells worth their while. After tumbling roughly 1 percent, month-over-month, in June, July witnessed a 2.44 percent decline in the global active rigs count, which now stands at 1118 rigs. Canada, on the other hand, saw its total rig count fall on a 9.2 percent reduction in oil rigs –to 88- and a 2.7 percent drop in the gas rig count – to 108. Among Oil & Gas Related Equipment and Services stocks, all of the top 20 companies are up, except for Kinder Morgan Management, LLC (NYSE: KMR), which is flat.

Some of the biggest large and mega-cap winners of the day include Chevron Corporation (NYSE: CVX), Anadarko Petroleum Corporation (NYSE: APC), Plains GP Holdings LP (NYSE: PAGP), Cameron International Corporation (NYSE: CAM), and Schlumberger Limited. (NYSE: SLB), all up more than 2 percent.

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