Resilient Baker Hughes rig count data
Resilient Baker Hughes rig count data through last Friday's report document what might prove a very different U.S. oil and gas industry response to falling prices this winter than seen in the 2015-16 episode. The resurgence of U.S. fracking and lateral drilling activity since 2016 has been strategic, with a focus on cost containment and price hedging, and natural gas prices have been firm despite the oil price drop. The Permian field is being prepped for a substantial late 2019 production surge as new pipelines come on board, so reported output data have understated the pace of transition in the industry. The total Baker Hughes U.S. rig count was steady last week at 1,075, with a 4 rig drop for oil but a 4 rig rise for natural gas, and the count remains negligibly below the recent-peak for the monthly average of 1,079 in November. With Aramco bond financing in March, Saudi Arabia will likely take on the lion's share of production cutbacks that will support prices, even as drilling continues in West Texas.