Rigs targeting oil and natural gas in the U.S. declined by the most in seven weeks as freezing temperatures and icy storms swept across the nation, cutting energy production and shrinking fuel supplies.
Oil rigs fell for the first time in five weeks, dropping by six to 1,416, data posted on Baker Hughes Inc.’s website show. The gas count dropped by seven to 351, the Houston-based field services company said.
The total count slid as snow, sleet and rain spread across the U.S., freezing gas wells and sending spot prices of the fuel in some regions to record highs. Chesapeake Energy Corp., the second-largest natural gas producer in the U.S., said yesterday that output has dropped due to “winter weather challenges” since December.
“When temperatures are like this, a drilling rig is not a happy place to be,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone.
Chesapeake expects the fourth quarter of 2013 and first quarter of this year to “mark our production low point,” Doug Lawler, the company’s chief executive officer, said in a conference call with analysts yesterday.
U.S. gas stockpiles fell 262 billion cubic feet in the week ended Jan. 31 to 1.923 trillion, more than the five-year average drop of 151 billion, according to the Energy Information Administration, the Energy Department’s statistical unit. Supplies were 28.8 percent below year-earlier levels.
Natural gas for March delivery fell 15.6 cents, or 3.2 percent, to settle at $4.775 per million British thermal units on the New York Mercantile Exchange, up 45 percent in the past year.
Rigs dropped the most this week in West Virginia, where temperatures fell to minus 5 degrees Fahrenheit (minus 21 Celsius) last month, according to the National Weather Service in Charleston, West Virgina. The region is in store for more cold weather today with flurries of snow lasting into tomorrow, the weather service said.
The Marcellus Basin in the eastern U.S. lost five rigs to 81, it’s lowest count since July. A storm may “push a batch of snow” north along the East Coast tomorrow, reaching the southern Appalachians, Alex Sosnowski, a meteorologist at AccuWeather.com in State College, Pennsylvania, said today.
U.S. oil output was unchanged at 8.04 million barrels a day last week after climbing in January to the highest level since 1988, the EIA said. Crude stockpiles climbed 440,000 barrels to 358.1 million.
West Texas Intermediate crude for March delivery increased $2.04, or 2.1 percent, to $99.88 a barrel on the Nymex, up 4.2 percent in the past year.