Yahoo Finance Will the US Natural Gas Rig Count Test Fresh Lows?
Natural Gas Prices Hit a 1-Month Low: Forecasts for 2016 and 2017
Weekly US natural gas rig count
Baker Hughes (BHI) is scheduled to release its weekly US natural gas rig count today. It reported that the US natural gas rig count fell by two rigs to 85 rigs between May 13 and May 20. The US natural gas rig count has fallen by 77 rigs year-to-date. The rig count fell by 2.3% week-over-week and by 61.7% year-over-year.
Peaks and lows
The US natural gas rig count peaked at 1,606 rigs on September 12, 2008. In contrast, it hit a fresh low of 85 rigs in the week ending May 20, 2016. This was the lowest level in the last 29 years. Lower natural gas prices led to the decline in oil and natural gas drilling activity. Natural gas prices were lower due to oversupply. For the latest on natural gas prices, read the first part of this series.
EIA’s monthly drilling report
In its monthly drilling report, the EIA (U.S. Energy Information Administration) estimated that natural gas production in the seven major shale regions would decline. Production is estimated to fall by 464 MMcf (million cubic feet) per day to 45,972 MMcf per day in June 2016 compared to May 2016.
The fall in drilling activity affects oil drillers such as Rowan Companies (RDC), Helmerich & Payne (HP), Atwood Oceanics (ATW), and Transocean (RIG). The fall in drilling activity also affects natural gas production. We’ll analyze this in the next part of this series.
Impact on ETFs
The uncertainty in natural gas prices affects ETFs and ETNs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE) and the Fidelity MSCI Energy Index ETF (FENY).
In the next part of this series, we’ll cover production and consumption data.
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