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US Natural Gas Rig Count Tests New Lows

Gordon Kristopher

Natural Gas Market: Key Factors that Drive Natural Gas Prices

(Continued from Prior Part)

US natural gas rig count

Last week, the US natural gas rig count fell by 1 to 88 rigs for the week ended April 22, 2016, compared to the previous week. The weekly active US natural gas rig count has fallen by 74 rigs in 2016.

US natural gas rig count: Peak and lows

The US natural gas rig count peaked at 1,606 rigs on September 12, 2008. On the other hand, the gas rig count hit 88 rigs for the week ended April 22, 2016, which is among the lowest levels in the last 29 years. US active natural gas rigs fell to record lows due to multiyear low natural gas prices. For the latest on natural gas prices, please read the first part of this series.

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The US natural gas drilling activity fell by 61% year-over-year. The decline in drilling activity affects drillers like Rowan Companies (RDC), Atwood Oceanics (ATW), and Diamond Offshore (DO). For more information on the US crude oil rig count, please read US Crude Oil Rig Count Hits a Multi-Decade Low: What’s Next?

The record low natural gas rigs haven’t affected the natural gas production. We’ll discuss this in the next part of this series.

EIA’s monthly drilling report

The EIA (U.S. Energy Information Administration) reported that natural gas production in the seven major shale regions will fall by 491 MMcf (million cubic feet) per day to 45,929 MMcf per day in May 2016 when compared to the previous month.

International gas rig count

Baker Hughes’ (BHI) data about the international rig count excludes the rig count data for the US and Canada. This data showed that the international gas rig count fell by five rigs to 218 for March 2016 compared to February 2016. It fell by 2.5% month-over-month. It fell by 21 rigs, or 8.8% year-over-year.

Impact on ETFs

ETFs and ETNs like the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the Fidelity MSCI Energy ETF (FENY), and the VelocityShares 3x Long Natural Gas ETN (UGAZ) are also influenced by the ups and down in the oil and gas market.

Continue to Next Part

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