US rig count higher as Texas rebound continues: Baker Hughes

18 Sep 2023

Quantum Commodity Intelligence – North American drilling activity was up for a second week as drilling activity stabilizes following this year’s sharp downtrend, according to the latest report from oilfield services firm Baker Hughes.

The total rig count bounced by nine units to 641 the week ending 15 September, which was still 122 rigs below the same stage last year, or down 16%.

The oil rig count edged up two to 515, which was 84 fewer than at the same stage last year, while rigs drilling for gas gained eight rigs to 121, which was 41 fewer on the year.

Texas led the gains for a second week, adding seven units to 317 and is now 47 fewer than a year ago, while the Permian Basin, spanning West Texas and New Mexico, added two rigs, edging up to 322 but down 21 from year-ago levels.

Latest figures from the Energy Information Administration put US crude at 12.9 million bpd in the first week of September, the highest since early 2020.

Meanwhile, NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday at $90.77/b for the Oct23 contract, up 3.7% on the week.

Front-month Oct23 ICE Brent futures closed at $93.93/b, up 3.6% over the same timeframe.

However, on a FOB US Gulf basis, WTI prices have nudged above ICE Brent futures, amid a surge in exports to Europe and Asia-Pacific.

WTI Midland is now a major component of the Dated Brent basket since its inclusion from June of this year, boosting arbitrage flows.

Argus research calculates that Asia-Pacific refiners have already purchased 50 million barrels of US crude for October loading, including 40 million barrels of light sweet crude, with South Korea, in particular, ramping up imports from the Americas.  

Asian refiners are also loading up on low-sulfur grades from Brazil as OPEC cuts continued to restrict volumes of heavier barrels and maintain the Dubai premium to both Brent and WTI.

US natural gas was higher over the week as the Oct23 Henry Hub contract on NYMEX closed at $2.605/mmBtu for a slim gain of 1.5%, as markets failed to hold midweek peaks that had lifted futures to around $2.80/mmBtu.

Persistently high production continues to cap prices, while the Freeport LNG terminal in Texas was forced to cancel at least four LNG cargoes last week due to a fall in feedgas due to a technical problem.