The number of rigs targeting oil in the U.S. advanced this week, recovering from two weeks of declines, as producers increased their focus on crude.
The oil count gained eight to 1,410, the most in three weeks, Baker Hughes Inc. said on its website. Natural gas rigs were unchanged at 354, near an 18-year low of 350 set May 10, according to data posted by the Houston-based oilfield-services company. Total energy rigs rose by nine to 1,771, the highest in seven weeks.
Hydraulic fracturing and improvements in drilling have triggered a surge in gas output that depressed prices and created a glut, weakening demand for gas rigs. Rigs targeting the fuel make up 20 percent of the total U.S. count, near the smallest share since Baker Hughes separated oil and gas counts in 1987.
“The growth in the oil rig count is a reflection of strong oil prices relative to natural gas,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “Gas drilling will come up as prices come up. We can probably expect a recovery toward the end of the year.”
Natural gas for July delivery slipped 3.9 cents, or 1 percent, to settle at $3.984 per million British thermal units on the New York Mercantile Exchange. Prices are up 64 percent from a year ago.
U.S. gas stockpiles gained 88 billion cubic feet to 2.141 trillion in the week ended May 24, below the five-year average injection of 92 billion, the Energy Information Administration, the Energy Department’s statistical arm, said yesterday. Supplies were 23.7 percent below year-earlier inventories, versus 24.9 percent in the previous week’s report.
U.S. oil output climbed 0.5 percent to 7.29 million barrels a day last week, EIA data show. Production reached 7.37 million barrels a day in the week ended May 3, the most since February 1992. Stockpiles also climbed last week, by 0.8 percent to 397.6 million barrels, the most since the agency began gathering weekly data in 1982.
Crude for July delivery declined $1.64, or 1.8 percent, to $91.97 a barrel today on the Nymex. Prices have gained 6.3 percent in the past year.
Oil futures have traded as much as 24 times higher than gas futures this month, compared with a 10-year average of 15 times, according to data compiled by Bloomberg.
The number of directional rigs, which drillers typically use to produce multiple wells from the same pad, gained for the fourth straight week to 232. That’s the highest count in 10 months, according to Baker Hughes data.
Vertical rigs dropped for a fourth week, losing seven to 450. Horizontal rigs, which now make up the majority of the count, climbed by two to 1,089.
Texas gained the most rigs this week, rising by three to 843. Colorado, North Dakota and Oklahoma each gained two rigs.
Rigs on land rose by six to 1,691. Rigs in inland waters slipped by one to 25.
The offshore rig count, primarily in the Gulf of Mexico, jumped by four to 55.
Canadian energy rigs gained for the third straight week, rising by 14 to 145, following a seasonal drilling pattern.