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U.S. rig count drops amid concern global glut will persist
The number of rigs exploring for oil and natural gas in the U.S. decreased by two last week as a major forecast indicated the downturn that started two years ago could continue well into 2017. Across the U.S., 506 rigs were active for the week ending Friday, down 40 percent compared to the 842 operating a year ago, according to Houston-based oilfield-services company Baker Hughes Inc. Of last week’s total, 416 rigs sought oil, which was up by two from the week before. The number of oil rigs in operation has risen 11 of the past 12 weeks, the longest streak since early 2014. Rigs drilling for gas dropped by three to 89 last week. One rig was listed as miscellaneous.
The U.S. rig count peaked at 4,530 in 1981 and hit its lowest level in May at 404. The Gulf of Mexico rig count, which has the greatest impact on Houma-Thibodaux’s oil-based economy, rose by two to 20 this week. It’s down by nine rigs, 31 percent, from a year ago, according to the Louisiana Department of Natural Resources. Louisiana’s rig count, on land and offshore, dropped by two to 41, down 41 percent from a year ago.
Crude oil prices, meanwhile, dropped last week amid concern that the glut that has persisted for more than two years will continue. West Texas Intermediate crude, the U.S. benchmark, closed Friday at $43.03 a barrel, down 2 percent for the day and 6 percent for the week. Brent, the world benchmark, closed at $45.87, down 1.6 percent for the day and nearly 5 percent for the week.
Prices are at less than half their levels from two years ago.Terrebonne and Lafourche residents have watched the numbers as a downturn in the oil and gas industry, the area’s main economic engine, continues to take a toll. In the past two-and-a-half years, Houma-Thibodaux’s unemployment rate has risen from the nation’s lowest, 2.8 percent, to its current 7.2 percent. The local jobless rate has fallen to 352nd among 387 nationwide, according to the U.S. Bureau of Labor Statistics. Including ties, only 31 metro areas have higher unemployment rates than Houma-Thibodaux, which has lost more than 7,000 jobs in two years.
Oil and natural gas companies have cut more than 350,000 jobs since crude prices started to fall in 2014, reports show. A global supply glut, fueled in part by a U.S. shale boom, is expected to keep prices from rising significantly. Last week, the International Energy Agency downgraded its previous predictions and forecast the oil glut will continue well into 2017, citing increased production in the Middle East and lower demand from China, India and Europe. “When will the world oil market return to balance? That is the big question today,” the agency said in its monthly forecast. “With the price of oil at current levels, one would expect supply to contract and demand to grow strongly. However, the opposite now seems to be happening. Demand growth is slowing and supply is rising.” Mark Barron Womens Jersey
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