Crude prices declined in December, due to apprehension that steadily increasing interest rates will trigger a global economic recession. WTI fell 9.4%, to average $76.44/bbl in December, with Brent trading at $80.92/bbl, down 11.5% compared to November. Similar to Brent, Dubai Fateh fell 11% to average $76.78/bbl in December. In the U.S., natural gas prices at HH have plummeted $3.28/MMBtu since August ($8.81/MMBtu) to average just $5.53/MMBtu in December, a 37% decline.
U.S crude output decreased 250,000 bopd to average 12.0 MMbopd in December. Saudi Arabia’s production was essentially unchanged, with the Kingdom averaging 10.44 MMbopd. Output from Russia was also unchanged at 9.8 MMbopd.
The reduction in crude and natural gas prices put a damper on U.S. drilling, as the rig count dropped nine to average 780 in December. Although the overall Texas count was unchanged (372), District 6 (Haynesville) suffered a three-rig decrease, down to 23, with Wyoming losing two rigs, to average 22 in December. The DUC count continues to build, especially in regions dominated by natural gas production. In December, there were 4,577 DUCs in the U.S., 40 more than the month-ago tally of 4,537. Large y-o-y DUC gains were reported in the Haynesville (+61%) Niobrara (+50%) and Appalachia (+28%) regions.
International activity also decreased, averaging 1,111 rigs in November, 14 fewer than were running in October. The decrease was attributed mainly to a 14-rig drop in Canada. WO