US energy companies have once again cut the number of active oil rigs, a sign they are increasingly worried about future US production this year and next.
Energy companies last week cut the number of operating oil and natural gas rigs – the first time since last August they have done so for three weeks in a row.
Energy services firm Baker Hughes said in its weekly report that the oil and gas rig count fell by four to 749 in the week to March 3, the lowest since June.
US oil rigs fell eight to 592 this week, their lowest since September, while gas rigs rose three to 154.
Despite the latest fall, Baker Hughes said the total count was still up 99 rigs, or 15%, over this time last year.
Energy traders noted that the total oil and gas rig count has declined for three months in a row due mostly to weakening energy prices, especially gas, though last week saw a reversal in prices.
Crude prices extended their gains Friday afternoon after the Baker Hughes report.
US West Texas Intermediate crude rose 4.4% to $US79.68 a barrel and Brent rose 3.63% to $85.83 a barrel.
US gas futures added 18% last week as well as big storms again hit California and the midwest and northeast for yet another time this northern winter.
US oil major Chevron Corp last week expanded its annual share buyback program by 17% to $US17.5 billion and laid out plans to add 750,000 barrels of oil and gas a day to its US production on improvements from its holdings in shale oil and gas basins and the Gulf of Mexico.
US crude production was on track to rise from 11.9 million barrels per day (bpd) in 2022 to 12.5 million bpd in 2023 and 12.7 million bpd in 2024, according to the latest estimates from the Energy Information Administration (EIA). That compares with a record 12.3 million bpd in 2019.
In December, however, US crude oil production fell to 12.10 million bpd, its lowest since August 2022, EIA data showed.
Last week’s price gains were partly driven by better news about the US economy (even though US stocks of oil and products continue to rise) and more evidence that China is doing better than expected.
China’s economy is in fact rebounding more quickly from the zero-Covid policies that cut growth. China Friday said growth in its service sector is running at a six-month high, while manufacturing activity is rising at the fastest pace in a decade.
Car sales have picked up as well and the country’s parliament is set to reveal a higher growth rate for 2023 than last year’s weak 3%.
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Iron ore prices are benefitting from the Chinese rebound but not thermal coal or LNG. SGX iron ore prices ended at $US125.50 a tonne, down 50 cents a tonne over the week but still well above start of year levels around $US10 a tonne lower in late December.
Prices in China on the Dalian futures market were a little higher – touching $US131 a tonne at one stage for distant months and higher-grade cargoes (63.5% Fe fines instead of the benchmark 62% Fe fines from the Pilbara).
Australian premium coking coal traded higher in Singapore on Friday – around $US351 a tonne against $US332 a tonne a week earlier.
But Newcastle thermal coal fell to $US194 a tonne for March delivery and $US187.15 a tonne for April – the latter lost more than 8% for the week.
JKM LNG prices in northern Asia continued to drift lower over the week as winter moves into Spring. prices settled at $US14.58 a million British Thermal units.
Comex copper picked up last week in the wake of the better economic news from China, ending up 3.2% at $US4.078 a pound.
Comex gold rose 2.13% over the week to $US1,847 an ounce and Comex silver added 1.35 to $US21.09 an ounce.
The strength came as US bond yields eased on Friday and the greenback faded with the dollar index losing half a per cent on Friday and 0.65% over last week.
The Aussie dollar closed at 67.68 US cents on Friday for a small loss on the day but a gain of 0.7% for the week.
