Number of active US oil and gas rigs will reach record lows
The quantity of operational oil and gas rigs on US territory is projected to reach an unprecedented low sometime this week, when compared to figures going as far back as 1940. This drop can be attributed to the US energy sector drastically reducing yield and slashing costs in order to cope with the plunge in fuel demand post COVID-19.
To put the falling numbers into context, last week’s rig count of 408 operational units in the US was only four units above the the record low that was set in May of 2016. This count was performed by per Baker Hughes Co, which has been conducting such tallies for over eight decades. The numbers for this week are set to be released after 1 pm (1700 GMT).
The global demand for fuel has dropped by nearly a third and organizations are resorting to radical spending cuts, massive layoffs and the shutting down of production facilities, in order to counterbalance the world overabundance of the commodity. Despite the modest spike in consumption over the last month or so, the menacing global oversupply is believed to make its mark for at least the next foreseeable months, if not years.
Producers have reduced the number of operational rigs by an average of 55 every week since March 15th, after oil prices began to drop as a result of the global coronavirus crisis and a short-lived Russia-Saudi Arabia price war.
Experts believe that organizations will continue shutting down rigs for the remainder of the year and will be reluctant to bring a large number of new units into operation in 2021 and 2022.
Canada’s tally of operational oil and gas rigs has already took a dive to a record low of only 26 units two weeks prior, as indicated by Baker Hughes.
Investment bank, Raymond James predicted the US tally of oil and gas rigs would take its own dive from around eight hundred, recorded towards the end of 2019 to around four hundred by mid-2020 and two hundred by year’s end. The institution also predicts the average count of operational rigs in the US to be around 225 in 2021.
US crude futures held steady at US$24 a barrel on Thursday (May 8), down nearly two-thirds since January, as the nation’s stay-at-home measures aimed at stemming the virus stemmed economic growth worldwide, as well as demand for fuel.