Despite increased global demand, a war in the Middle East and sustained production cuts by Saudi Arabia and Russia, benchmark crude prices fell again in November, with Brent down 8.5% to $82.94/bbl, while WTI declined 9.3% to average $77.69.64/bbl. The drop in oil prices comes after Brent declined 3% in October ($90.78/bbl), while WTI dropped 4.2% to $85.64/bbl.
U.S. rig count. U.S. drilling activity continued on a downward trajectory, with the rig count losing four in November, dropping to 619, after falling eight rigs in October, 16 in September and 25 in August. The overall Texas count was down just one rig to 303, but the Permian basin (District 8) experienced a six-rig decline, dropping to 175, while offshore Louisiana suffered a two-rig decline, to average 16 in November. New Mexico managed to buck the downward spiral, adding three rigs to 106.
U.S. oil production continued to rise despite the year-long reduction in drilling activity. Since topping at 784 the week of Dec. 2, 2022, the U.S. rig count has consistently declined before bottoming at 616 the week of Nov. 10, 2023. The 168 rig-loss represents a 24% reduction in total U.S. drilling activity over the 11-month period. Despite the alarming trend, U.S. oil production reached an all-time high of 13.1 MMbopd in October, surpassing its previous record set in September by 53,000 bopd. According to a World Oil Editorial Advisor, the inverse correlation is due to operators completing wells in their DUC inventory and improved efficiencies in U.S. shale operations.
U.S. natural gas prices declined in November, in spite of the onset of colder winter weather. The commodity at Henry Hub was trading at $2.71/MMBtu in November, compared to $2.98/MMbtu in October. The 12-month running average at HH continued to decline, down to $2.79/MMBtu in November, documenting the catastrophic price reduction since August 2022, when operators were receiving $8.81/MMBtu.
Drilled but uncompleted. Despite a substantial reduction in U.S. drilling activity, the overall DUC count remains persistently high on a y-o-y basis. In November 2023, there were 4,415 DUCs in the U.S., just 28 less than reported in November 2022 (4,443). However, over the last several months the build in the DUC inventory has moderated, with four of the seven regions showing y-o-y declines. The Bakken, Eagle Ford, Permian and Anadarko regions experienced y-o-y changes of -34%, -33%, -21% and -2% in their DUC inventories, respectively. However, large year-over-year gains were reported in gas-dominated regions in Appalachia, where DUCs are up to 761 (+28%); the Haynesville reported 736 (+30%), while the Niobrara count reached 700 (+48%). These three regions account for 50% of the total U.S. DUC inventory.
International rig count. Drilling activity outside the U.S. improved slightly in October, with the international rig count averaging 1,154, 26 more than the 1,128 units working in September. The majority of the increase was due to a 20-rig gain in onshore drilling, with the Middle East up nine to 293. Latin America jumped seven to 147, while Asia Pacific tallied 126 rigs, a four-rig improvement. WO
CRAIG.FLEMING@WORLDOIL.COM