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U.S. drilling rigs increase despite sharp drop of oil prices this week

HOUSTON
2018-07-15 18:41

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The number of active drilling rigs in the United States increased by two this week to 1,054, or 102 more than that this time last year, showed weekly data collected by Baker Hughes released Friday.

Meanwhile, oil prices rallied on Friday, but posted sharp losses for the week.

The Houston-based oilfield services company Baker Hughes reported that the two added rigs were all in gas drilling.

There are now 863 rigs drilling for oil in the country with more than half of them located in the Permian Basin region of West Texas and New Mexico. There are 189 gas rigs and two miscellaneous rigs.

Canada gained 15 oil and gas rigs for the week, 13 of which were oil rigs. Canada's oil and gas rigs are now up just 6 year over year. Oil rigs are up by 33 year over year in Canada, while the number of gas rigs are down by 27.

Baker Hughes reported an increase of five active rigs in the United States in the previous week. The slight uptick this week occurred despite a sharp drop in oil prices on news that Libya will resume oil exports. Furthermore, Russia's Energy Minister Alexander Novak has said that OPEC and its allies could boost oil production by more than 1 million barrels a day agreed last month if needed.

However, the escalating trade dispute between China and the United States, and serious inventory draws for U.S. crude oil are also working to lift the price of oil.

U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 12.6 million barrels during the week ending July 6, the biggest weekly drop in domestic crude supplies in nearly two years. At 405.2 million barrels, U.S. crude oil inventories are about 4 percent below the five year average for this time of year.

U.S. crude oil refinery inputs averaged about 17.7 million barrels per day during the week ending July 6, which was 1,000 barrels per day less than the previous week's average. Total motor gasoline inventories decreased by 0.7 million barrels last week and are about 6 percent above the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week.

Distillate fuel inventories increased by 4.1 million barrels last week and are about 12 percent below the five year average for this time of year. Total products supplied over the last four-week period averaged 20.4 million barrels per day, down by 1.4 percent from the same period last year.

Over the past four weeks, motor gasoline product supplied averaged 9.6 million barrels per day, down by 1.7 percent from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels per day over the past four weeks, down by 6.1 percent from the same period last year. Jet fuel product supplied was up 0.1 percent compared with the same four-week period last year.

Oil prices rallied on Friday as traders continued to digest the monthly report from the International Energy Agency (IEA).

The IEA said in a report released Thursday that various supply concerns, such as the U.S. sanction on Iran and the uncertainty surrounding Libya, provided supports to oil prices, adding that this vulnerability currently underpins oil prices and seems likely to continue doing so.

The West Texas Intermediate for August delivery rose 0.68 U.S. dollar to settle at 71.01 dollars a barrel on the New York Mercantile Exchange, while Brent crude for September delivery added 0.88 dollar to 75.33 dollars a barrel on the London ICE Futures Exchange.

The West Texas Intermediate and Brent lost 3.8 percent and 2.3 percent, respectively, for the week.
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