Baker Hughes reported on Friday that natural gas rigs increased by 3 rigs to 225 total rigs. The slight increase is the first rise in natural gas rigs in nine weeks.
While the Baker Hughes report has not recently had any noticeable effect on natural gas prices, the unexpected rise in natural gas rigs sent prices for the commodity lower immediately after the report’s release. Natural gas prices for May ’15 delivery settled at $2.511 per mmBTu on Friday.
Despite the slight rise in the number of natural gas rigs, the total number of rigs is still the lowest number of rigs since Baker Hughes started publishing the rig count in 1987.
Natural gas rigs have declined over 30% since the start of 2015 as prices have fallen sharply. Newer and efficient rigs, other infrastructure improvements, and prolific gas from the Marcellus and Utica shale areas have maintained production despite the falling rig count.
“This rise in rigs caught the market by surprise,” said Steve Kingston, a reporter for NatGasInvestor.com. “We have seen between four and five percent declines in nat gas rigs since January, and when it suddenly increased, albeit slightly, the market reacted by printing fresh lows.”
The closing settling price of $2.511 per mmBtu is the lowest since June 22, 2012.
“Some industry analysts have been calling for $2.50 gas since November. This unexpected rise in rigs almost pushed us there. If trading next week doesn’t put us below the $2.50 mark before Friday, you can be sure that any increase in natural gas rigs next week will surely drop us below that level.”
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