The Gulf of Mexico lost one drilling rig last week as the U.S. rig count continues to climb.
A key barometer for Houma-Thibodaux’s oil-based economy, the Gulf rig count stood at 21 Thursday, according to weekly figures from Houston-based oilfield-services company Baker-Hughes. Rig count data was released early last week due to the Easter holiday.
The Gulf count is down six from the same week in 2016, however, and down 10 compared to the 31 rigs that were working in the 15th week of 2015.
The rig lost last week was drilling for oil. The Gulf continues to have two rigs drilling for natural gas for the first time since August.
For the 13th consecutive week, the U.S. rig count made gains, increasing by eight to 847. That’s up 407 from this point last year and is the highest the U.S. rig count has been since 848 rigs were working in the second week of September 2015.
The number of rigs is still down 14 percent compared to the 15th week of 2015 when the U.S. had 988 rigs. Of the current 847 rigs, 683 sought oil, 162 explored for natural gas and two were listed as miscellaneous.
Gains in the rig count continue because of added rigs inland. Eleven inland rigs were added last week, with New Mexico adding seven, Oklahoma adding three rigs and Texas adding two. Louisiana lost an inland rig last week, bringing the state’s total inland rigs to 38.
Numerous analysts and economists have reported that advancements in fracking and other technologies have allowed shale drillers to reduce break-even costs to $30-$40 a barrel. In contrast, the Gulf’s deepwater platforms take years to bring online and require oil prices of around $60 a barrel to break even.
Oil prices remain below that $60 a barrel benchmark. West Texas Intermediate crude, the U.S. benchmark, finished trading Thursday at $53.18 a barrel, while Brent, the international benchmark, closed at $55.89. Both benchmarks made gains last week, with WTI increasing over a dollar and Brent gaining 69 cents.
A new report this week from the International Energy Agency, a coalition of 29 countries which focuses on energy security, economic development, environmental awareness and engagement worldwide, paints the picture of a continued uncertain future for oil prices.
The IEA lowered its forecast for global demand growth to 1.3 million barrels per day following weaker than expected demand during the first quarter of the year. At the same time, however, world oil supply fell by 755 thousand barrels per day as those OPEC and non-OPEC nations improved compliance with November’s deal to cut production.
Production from nations not included in the deal, however, is set to increase by 485 kb/d in 2017.
The reports says that if OPEC decided to extend the production cuts past June it would have a positive impact on prices but would also encourage U.S. shale and others to increase production.
“Indeed, although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the US, will soon be on the rise again,” the report notes. “Even after taking into account production cut pledges from the eleven non-OPEC countries, unplanned outages in Canada as well as in the North Sea, we expect production will grow again on a year-on-year basis by May.”