Baker Hughes US Land Weekly Rig Report - Oct 16 2020

This week, the US Land Rig Count increased 13 rigs this week to 267 active rigs. The ArkLaTex and Bakken each added one rig, the MidCon added 2 rigs, and the Eagle Ford added 5 rigs. The Permian was flat while the DJ Basin was down one rig.

Since the low point of 230 rigs on the week of August 14, the rig count has increased 16%. After the low point, the rig count skipped along the bottom for several weeks as the market continued to adjust to lower prices. Over the last 6 weeks, we have seen the rig count increase in most areas as operators returned to drilling. 

With Q3 results coming out over the next several weeks, we should learn about plans for Q4 and the start of 2021.

Figure 1: Baker Hughes US Land Weekly Rig Count - Oct 16 2020
(Source: Baker Hughes)

Table 1: Baker Hughes US Land Weekly Rig Count - Oct 16 2020
(Source: Baker Hughes)

 

HFIR - Implied IEA Oil Supply And Demand Balance Suggests No Excess Inventories By Year End

Summary

• IEA's oil market report was released yesterday suggesting a Q4 2020 market deficit of 4.1 mb/d.
• Excess oil inventories for OECD is pegged at 209.1 million barrels. This means that the deficit in Q4 will eliminate all of the surpluses and more.
• In addition, we have US oil production materially lower than IEA's ~11 mb/d average for Q4, which means there's potentially more draws ahead.
• Now all of this is also hinged on demand returning to average ~96.1 mb/d for Q4, so this remains the largest variable to get right.
• So unless IEA can't do math or something goes awfully wrong, it does appear that the excess oil inventories should be eliminated by year-end.

https://seekingalpha.com/article/4379299-implied-iea-oil-supply-and-demand-balance-suggests-no-excess-inventories-year-end

OilPirce.com - The Next Couple Of Months Are Crucial For U.S. Oil

The U.S. oil industry faces a bumpy road to recovery from the steepest slump in oil demand in history.

Oil demand in the United States and elsewhere is still trailing below last year’s levels, while a growing number of indebted shale producers struggle to refinance debts at these low oil prices and file for bankruptcy protection to restructure debt loads.

Oil prices may remain lower for longer with global oil demand unlikely to return to pre-crisis levels by the end of 2021, piling further pressure on the U.S. shale patch which, executives say, will need WTI Crude prices above $46 a barrel to see a substantial increase in completions of drilled but uncompleted wells (DUCs).

On top of the immediate financial concerns of many producers about profitability and debt levels, the U.S. oil industry also faces a shift in markets’ perception about the sector with increased investor calls for decarbonization.

https://oilprice.com/Energy/Energy-General/The-Next-Couple-Of-Months-Are-Crucial-For-US-Oil.html

Baker Hughes US Land Weekly Rig Count - October 9 2020

This week, the Baker Hughes US Land Weekly Rig Count rose by 3 rigs to reach 254 active rigs. The Eagle Ford addded 2 rigs and the Permain added 1 rig while the Northeast lost 1 rig. The rig count continues to move in a positive direction even though current oil prices have dropped in recent weeks.

Figure 1: Baker Hughes US Land Weekly Rig Report - October 9 2020
(Source: Baker Hughes)

Table 1: Baker Hughes US Land Weekly Rig Report - October 9 2020
(Source: Baker Hughes)

Houston Chronicle: Dallas Fed: Most oil executives say U.S. production has peaked

Most Texas oil and gas executives believe U.S. oil production has peaked, according to a survey conducted by the Federal Reserve Bank of Dallas and published last week.

In a survey on the state of the oil and gas industry, 66 percent of respondents said they believe oil production in the U.S. has reached its maximum level, while 34 percent said they do not.

The U.S. oil and gas sector has struggled amid a spring collapse in oil prices driven by the COVID-19 crisis. Since then, global demand for oil and refined products has fallen and business activity in the sector has declined.

https://www.houstonchronicle.com/business/energy/article/Majority-of-oil-and-gas-executives-believe-U-S-15612980.php

Baker Hughes US Land Weekly Rig Count - Oct 2 2020

 The Baker Hughes US Land Weekly Rig Count for this week was up 5 rigs this week with 251 active rigs in US Land. The Permian added 4 rigs and the Bakken added 1 rig. All other areas remained flat this week.

Figure 1: Baker Hughes US Land Weekly Rig Count - Oct 2 2020
(Source: Baker Hughes)

Table 1: Baker Hughes US Land Weekly Rig Count - Oct 2 2020
(Source: Baker Hughes)

World Oil - Oil demand won’t recover for at least 18 months, say top traders

(Bloomberg) --Global oil demand won’t meaningfully recover for at least 18 months, said the heads of the world’s biggest independent trading houses.

Speaking at the FT Commodities Global Summit on Tuesday, some of the most influential people in the oil market offered a dim outlook.

“It is very hard to be bullish on the oil price now and into Christmas,” said Ben Luckock, co-head of oil trading at Trafigura Group.

Mercuria Energy Group Chief Executive Marco Dunand said oil consumption could rebound from the coronavirus in about 18 months, while Torbjorn Tornqvist, his counterpart at Gunvor Group Ltd., and hedge fund manager Pierre Andurand both saw the timeframe closer to two years.

Daily consumption is still 4 million to 5 million barrels day below where it was expected to be before the pandemic, said Russell Hardy, the chief executive of Vitol Group, the biggest independent oil trader. He doesn’t expect a meaningful pickup in demand until at least the summer of 2021.

https://www.worldoil.com/news/2020/9/30/oil-demand-won-t-recover-for-at-least-18-months-say-top-traders?id=31307113