Oil prices are performing a precarious balancing act as US oil production increases simultaneously with reduction in output from OPEC and other oil producers.
The price for Benchmark crude futures hardly budged from $55.86 a barrel at 6:57am. Yesterday’s price of $56.65 was the high for the month, just before it shrunk slightly today.
Only 6 cents separated today’s and yesterday’s price for US West Texas Intermediate crude futures, falling slightly. Yesterday’s price was the highest a barrel had been since March 7, at $53.76.
The weekly Energy Information Administration (EIA) report points to US oil output rising, while also showing that US stockpiles at the crude hub in Cushing, Oklahoma went up by 276,000 barrels during the week which ended on April 7.
Other data, however, showed a surprising fall in overall US crude inventories. Last week inventories fell by 2.2 million barrels while imports went down by 717,000 barrels per day.
“We saw a bit of a reversal in oil prices (on Wednesday) and it came despite some positive news,” chief market strategist at Sydney’s CMC Markets. “It does appear that there is bit of focus on the data that came alongside inventory numbers which showed further increase in U.S. production.”
With the addition of two new oil rigs operating in the Gulf of Mexico 16 new ones across the US, there are now a total of 653 drilling for oil and gas.
It is good news for the oil industry, but those numbers are far below the number of rigs operating in 2014 and 2015. According to numbers released last week by the Houston-based oilfield-services company Baker-Hughes, this year’s number is lower by 47 since last year, and is still 65 percent lower than the 1,882 which were pumping out oil and gas at the end of 2014.
Of the 653 rigs working today, 129 are looking for natural gas and the remainder, 523, are bringing out oil.
The oil industry has been suffering as an oil glut continues to keep prices of oil low. Caused by a growing trend of drilling in US shale fields, combined with increased oil production by OPEC, the oil glut brought oil prices to half, and lower, than their mid-2014 high of $115 per barrel.
Lower oil prices froze exploration for new sources of oil and natural gas, and many people in the industry were laid off. The fact that the US rig count has been growing and now is higher than its been since January, could be a harbinger of better times for the industry.