A new report indicates that the number of rigs in the U.S. dropped last week, ending three consecutive weeks of increases.
According to oil field services company Baker Hughes, the number of U.S. rigs dropped to 857 last week, down from 863 the prior week. At the same time last year, there were more than 1,000 additional rigs searching for oil and gas in the nation.
This seemingly corresponds to lower oil prices, with West Texas Intermediate trading around $50 per barrel.
Natural gas rigs actually increased week over week, up one to 218. Despite the increase, gas rigs were down substantially from the same week last year, where they totaled 315. Oil rigs fell seven last week to 638, less than half of last year's number of 1,554. The one outstanding rig was unchanged from the previous week, which is largely drilling for geothermal energy.
The decrease affected horizontal and directional rigs — the ones used for fracking and looking for shale formations — the most, as that fell from 742 to 734 last week. Traditional vertical drilling rigs were up by two last week to 123.
Louisiana lost the most rigs, dropping three on the week. North Dakota, Pennsylvania and Texas each dropped two while California and Oklahoma fell one each. Arkansas, Colorado, Kansas and New Mexico each increased by one rig. Alaska, Ohio, Utah, West Virginia, Wyoming and U.S. offshore rigs in the Gulf of Mexico remained the same.
Though the numbers are down, one Forbes contributor indicates that this may be better than it seems. James Conca writes that increased production in OPEC nations like Saudi Arabia have forced U.S. producers to become leaner and more efficient, reducing their overhead and minimizing the impacts of lower demand.