In a recent report published by energy services company Baker Hughes, the number of oil rigs operating in the United States experienced a slight decline during the week ending Friday. Specifically, the count for oil rigs dropped from 485 to 483, indicating a decrease of two rigs. Conversely, the count for natural gas rigs saw a modest increase of one, rising to a total of 98, while the miscellaneous rigs count fell by one to settle at five. Reflecting on the performance from the previous year, the data reveals that during the same week last year, the United States had a significantly higher tally of 520 oil rigs, alongside 117 gas rigs and five miscellaneous rigs operational.
In total, there were 586 rigs functioning in the US this week, compared to 642 at the same time last year, marking a notable reduction in overall rig activity. Examining the situation state by state, Texas, the nation's primary producer, saw its rig count decrease by three, while Oklahoma experienced a gain of two rigs.
This dynamic illustrates the varying responses of different states to the trends in oil and gas production. Looking at North America as a whole, the decline continued, with the total number of oil-and-gas rigs dropping by two to reach 803, a stark contrast to the 831 rigs operating at this time last year.
Canada remained stable in its operations, maintaining a total of 217 rigs. In terms of pricing, West Texas Intermediate crude oil concluded Friday's trading session down by 1.8%, bringing the price to $76.75 per barrel. Brent crude, too, witnessed a decline of 1.5%, closing at $79.78 per barrel. Amid these fluctuations, the International Energy Agency (IEA) recently posited that global oil demand is expected to rise by less than 1 million barrels per day in 2024.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has provided a more optimistic forecast, pegging its growth expectations at 2.11 million barrels per day. However, the weakening demand from China, especially highlighted by July's oil refinery output falling to its lowest since 2022, has cast doubts on the OPEC outlook, rendering it 'too optimistic' according to Saxo Bank analysts. Saxo Bank's Head of Commodity Strategy, Ole Hansen, emphasized that current crude prices are being buoyed not solely by demand factors but also by persistent supply risks.
These include ongoing tensions in the Middle East, particularly the potential risk of an Iranian attack on Israel, combined with Russia's continuing military actions in Ukraine. Such geopolitical factors are crucial in shaping market sentiment, adding layers of complexity to the already volatile oil market. Overall, with a delicate balance of supply and demand, the future trajectory of oil prices remains uncertain as market players navigate through these challenging dynamics..