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Will the Natural Gas Rig Count Follow Natural Gas Prices?

Gordon Kristopher

Natural Gas Market: Inventory and Rig Count Update

(Continued from Prior Part)

Natural gas rig count 

In the last month, natural gas prices fell more than 18% due to oversupply concerns and weak demand as of November 12, 2015. In contrast, the natural gas rig count rose by ten in the last four weeks. Baker Hughes (BHI) will release the weekly natural gas rig count report on November 13, 2015. Last week, the natural gas rig count rose by two to 199 for the week ending November 6, 2015.

Impact 

The current momentum suggests that natural gas rigs could rise, but natural gas prices fell during the last month. It would put pressure on oil drillers like Baker Hughes, Schlumberger (SLB), Superior (SPN), and Halliburton (HAL). On November 10, 2015, the EIA (U.S. Energy Information Administration) published its monthly drilling report. The government data showed that natural gas production could fall by 394 million cubic feet per day in December 2015 compared to November 2015. The fall in the production suggests that the natural gas rig counts could fall in the short term.

The current natural gas rig count is 44% lower than the rig count of 356 in 2014. The US natural gas rig count fell due to the mammoth fall in natural gas prices. The prices fell more than 30% in the last year. The prices fell due to the record natural gas production. The natural gas production rose despite the fall in the prices lately due to improving efficiency and lower drilling costs. 

The roller coaster ride of the oil and gas market impacts ETFs like the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI).

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