Gas rigs in the U.S. jumped by the most in more than three years as futures capped a fourth weekly gain and drilling in Louisiana and Oklahoma increased.
The number of gas rigs climbed by 24 to 431 this week, the highest count since January and the biggest increase since Jan. 29, 2010, Baker Hughes Inc. (BHI) said on its website. Oil rigs were unchanged at 1,341, while total energy rigs rose 24 to 1,776, the Houston-based field-services company said.
U.S. gas rigs have dropped for five straight quarters as a glut of domestic supplies prompted producers to switch to output of more lucrative oil and liquids even amid near-record demand from electricity generators. Futures have since advanced to a 16-week high, raising the possibility that prices will surpass $4 per million British thermal units for the first time since September 2011.
“Gas prices have been coming up since January and some producers are probably anticipating they’ll continue up to reach $4 by the end of the year,” James Williams, president of WTRG Economics in London, Arkansas, said in a telephone interview. “Most need something closer to $4 to profitably drill, and by the time they drill the well and get it connected, they’ll probably see it.”
Natural gas for April delivery gained 6 cents, or 1.6 percent, to settle at $3.872 per million Btu on the New York Mercantile Exchange after reaching $3.924, the highest intraday price since Nov. 23. Futures have advanced 70 percent in a year.
Gas stockpiles fell 7 percent to 1.938 trillion cubic feet in the week ended March 8, the least since May 13, 2011, according to data compiled by the Energy Information Administration in Washington. They reached a record high of 3.929 trillion cubic feet on Nov. 2.
“Supply and demand are coming into balance, which is supportive of prices,” Williams said.
North America may be able to export 15 percent of its gas by 2040 as output surges and demand stalls, according to Exxon Mobil Corp. (XOM), the largest U.S. oil company.
“For the next two decades, over half the growth in unconventional gas supply will be in North America,” Exxon said in an energy outlook report released March 13 in Houston. “This will provide opportunities for North America to become a potential natural gas exporter by about 2020.”
Crude for April delivery on the Nymex rose 42 cents to $93.45 a barrel. Prices have risen 1.8 percent this year.
U.S. oil output rose 66,000 barrels a day to 7.16 million in the week ended March 8, the highest level since 1992, according to EIA data. Stockpiles climbed 0.7 percent to 384 million barrels last week and reached a 22-year high of 387.3 million in June.
Louisiana gained the most rigs this week, rising by eight to 114. Oklahoma added seven to 187.
Canadian energy rigs dropped a third week, declining by 77 to 503, following a seasonal drilling pattern.
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