Market Watch: Tropical Storm Lee combined with reduced holiday loads cut natural gas and electricity consumption over the weekend. It also forced Gulf of America production shut-ins, 61% for crude oil and 46% for natural gas, according to the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). Use this link to monitor developments related to oil and natural gas shut-ins.
Crude oil-directed weekly rig count surpassed 1,000
Since surpassing the weekly count of natural gas-directed rigs on April 21, the number of oil-directed rigs continued to increase steadily through August. On June 24, 2011, the Baker Hughes weekly count of rigs actively drilling for oil in the United States was 1,003, marking the first week since the company began separating oil and natural gas rig counts in 1987 that the 1,000 count threshold for oil-targeted rigs was surpassed. The weekly count reached 1,069 in the report released on August 26.
The rig count is an important indicator of exploration and development activity for both oil and natural gas. Historically, drilling for each resource has tracked price changes, although with some lag. Currently, the high price of crude oil compared to natural gas, the crude oil-to-natural gas price ratio, encourages operators to drill for oil in preference to natural gas. It also makes natural gas liquids developments more commercially attractive.
The August 17 This Week in Petroleum provides a more detail discussion on recent trends in oil-directed rigs.