The Baker Hughes weekly rig count shows a decrease of two oil rigs, bringing the total number of oil rigs to 422. In contrast, gas rigs saw an increase of nine, totalling 117.<\/p>\n
Overall, the total number of rigs increased by seven, reaching a cumulative count of 544 rigs.<\/p>\n
We see the drop in oil rigs, though minor, as a sign of continued producer caution and capital discipline. This slight reduction in future supply capability supports a bullish outlook for crude prices. This trend reinforces the idea that U.S. shale producers are not aggressively chasing higher prices with new drilling.<\/p>\n
This decline in drilling activity is happening while the oil rig count hovers near its lowest level since early 2022. It aligns with recent U.S. Energy Information Administration data showing a crude inventory draw of 2.5 million barrels and OPEC+ extending its production cuts. We believe traders should consider strategies that benefit from rising oil prices, such as buying call options on WTI futures.<\/p>\n
Conversely, the substantial jump in natural gas rigs suggests producers are moving to capitalize on the recent price rally driven by summer heatwave forecasts. This ramp-up in future supply is a bearish indicator for prices in the medium-term, particularly for contracts later in the year. This is the largest weekly gain in gas rigs in over a year.<\/p>\n
This increase in drilling comes as gas in underground storage sits more than 20% above the five-year average, according to the latest government figures. The combination of rising drilling activity and already high inventories creates a ceiling for prices once short-term demand fades. Traders could look at buying put options on Henry Hub futures for the winter strip to position for a potential price decline.<\/p>\n
The clear divergence between oil and gas drilling activity presents a relative value opportunity. Historically, such splits signal a strategic pivot by energy firms based on their assessment of commodity fundamentals. We feel the market may be underestimating the potential for continued oil market tightness relative to a well-supplied natural gas market.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Oil rigs fell by two to 422, while gas rigs rose by nine, totaling 544 rigs overall.<\/p>\n","protected":false},"author":62,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-26751","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/26751","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=26751"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/26751\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=26751"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=26751"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=26751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}