Rig count from U.S. drillers kept rising for a second week in a row, as higher oil prices and increased demand prompted higher activities, according to Baker Hughes data.
Firstly, during this week the oil and gas rig count, which is commonly an indicator of future output, or a metric for the market’s health, rose its count eight rigs, to 448 in the week ending May 7. According to Baker Hughes data, such count is the highest since April 2020.
Moreover, such count is an increase of 20%, compared to last year’s same period. It was also up 84% since falling to a record low of 244 in August 2020, according to Baker Hughes data going back to 1940.
Secondly, particularly U.S. oil rig count rose two to 344 this week; while gas rig count rose by seven, the most in a week since December 2018; and the highest in a monthly basis since March 2020, to 103.
Thirdly, as for crude oil prices, Brent crude was down 12 cents, and traded at $67,97 a barrel. While the U.S. West Texas Intermediate (WTI) crude fell 10 cents and traded at $64,61 per barrel.
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Rig count increases, amid bullish sentiment for oil prices
Moreover, according to Reuters, both contracts are set for consecutive weekly gains, as the coronavirus pandemic and the associated restrictions are easing; mainly due to the vaccine rollout. Therefore, recovering factory work and overall mobility which boosts demand for oil and all of its subproducts.
However, the oil demand recovery has been uneven around the world; mainly as in India, and the so-called Indian variety of the virus is causing major lockdowns in the country. India, indeed, is the third largest oil importer and consumer of the world.
In addition, for Stephen Brennock, oil expert at oil brokerage PVM, said. “Brent came within a whisker of breaking past $70 a barrel this week; but failed at the final hurdle as demand uncertainty dragged on prices.”
Finally, resurgence of the covid-19 in India, as said above, but also Japan, and Thailand may hinder gasoline demand recovery. Nevertheless, Gasoline demand in the U.S. and parts of Europe is faring relatively well. Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season.” Said energy consultancy FGE in a note.