Baker Hughes Reported A Decline Of 7 Oil Rigs Drilling In The US, While The Natural Gas Rig Count Held Steady

Market TalkMon, Feb 27, 2023
Baker Hughes Reported A Decline Of 7 Oil Rigs Drilling In The US, While The Natural Gas Rig Count Held Steady

It’s another mixed bag for energy markets to start the week, with ULSD trying to follow through on its strong showing Friday, while RBOB is flat and WTI is trading modestly lower to start the day. 

Natural gas prices have rebounded sharply in the past 4 days, reaching $2.69 overnight after trading as low as $1.96 last Wednesday. The restart of the Freeport export facility, and some forecast models calling for below average temps in March after a much warmer than normal winter are both getting credit for that rally, which is no doubt having some positive impact on ULSD prices which have rallied 15 cents since reaching their lowest levels in 13 months last week, just as natural gas prices were bottoming out.

The CFTC issued its first set of commitments of trader's data in nearly a month Friday, releasing data originally scheduled to be published from January 31. The agency hopes to get caught up with its reporting by Mid-March. In case you were wondering, the contracts directly impacted by the cyber-attack, based on the latest update were “IFED MISO IN RT Off-Peak and CME USD Malaysian Crude Palm Oil Calendar Spread contract markets”. Somehow, I think the world could have managed without seeing the COT data on those two contracts.   

While we’re still a couple of weeks behind for NYMEX contracts, we can see the money flows in ICE Brent and Gasoil contracts, and no surprise there it’s been steady liquidation by hedge funds for diesel contracts so far in February as prices have crumbled. 

Baker Hughes reported a decline of 7 oil rigs drilling in the US, while the natural gas rig count held steady. California, New Mexico, Oklahoma and West Virginia all had a decline of 2 or more rigs on the week, while Texas held steady. Canada looks like it has topped out for its winter drilling season, with a reduction of 5 rigs on the week. 

Russia’s influence on European energy supplies continues to be a wild card, with changes continuing on a near daily basis. Over the weekend we saw reports that Russia was allowing shipments of crude from Kazakhstan to Germany to begin flowing after delaying them for several weeks only then to find out that Russia had cut off shipments to Poland due to “paperwork issues”. Neither event seemed to have much influence on futures prices but serve as a reminder that despite the relative calm that’s taken over markets so far in 2023, there are still plenty of unknowns in the global supply network this year.

The Deer Park TX refinery was forced to shut its smaller crude unit after a fire on Thursday, which was one of 3 fires to hit owner Pemex’s operations in the US and Mexico that day. 

So far there are no reports of major issues at California refineries following the blizzard, although power outages in the region were numerous.  

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Baker Hughes Reported A Decline Of 7 Oil Rigs Drilling In The US, While The Natural Gas Rig Count Held Steady