After declining for three consecutive months, benchmark crude prices rose in January, with Brent up 3.2% to $80.12/bbl. WTI increased 3.1% to average $74.15/bbl, as expanding tensions in the Middle East, OPEC+ production cuts, and rising demand started to take a toll on supply.
U.S. natural gas prices also jumped in January, as colder winter weather in the Northeast started to impact supply. The commodity at Henry Hub was trading at $3.18/MMBtu in January, compared to $2.52/MMbtu in December. The January 2024 price was the first time that gas had traded above $3.00.MMbtu since January 2023, when HH averaged $3.27/MMbtu. The HH 12-month running average leveled out at $2.54/MMbtu, documenting the relatively low price for product since hitting a 14-year high of $8.81/MMBtu in August 2022.
U.S. rig count. U.S. drilling activity continued on a downward trajectory, with the rig count dropping three in January, for a monthly average of 620. Since bottoming at 616 the week of Nov. 10, 2023, U.S. activity essentially stabilized at approximately 622 rigs for the subsequent 11 weeks. The overall Texas count was down one rig to 306, with a six-unit loss reported in District 8, down to 170, while District 6 dropped two rigs to 24. Drilling in New Mexico was down three rigs, to average 98 in January; total Louisiana was unchanged at 42, while Oklahoma was up two rigs to 43.
Drilled but uncompleted. The sustained lull in U.S. drilling activity is starting to cause a reduction in the overall DUC count on a y-o-y basis. In January 2024, there were 4,386 DUCs in the U.S., 285 less than reported in January 2023 (4,671). Over the last several months, the build in specific DUC inventories 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 declines of 42%, 27%, 16% and 4% in their DUC inventories, respectively. However, large year-over-year gains were reported in gas-dominated regions. In Ap palachia, DUCs were up to 780 (+23%), the Haynesville reported 745 (+17%), and the Niobrara count reached 653 (+16%). These three regions account for roughly 50% of the total U.S. DUC inventory.
International rig count. Drilling activity outside the U.S. deteriorated in December, with the international rig count averaging 1,116, 59 less than the 1,175 units reported in November. The decrease was due primarily to a 36-rig decline in Canada and 11-rig losses in the Middle East (336) and Africa (109). WO
CRAIG.FLEMING@WORLDOIL.COM