The number of active drilling rigs in the United States increased by 13 to 1,057, or 108 more than this time last year, according to the weekly data released by Baker Hughes on Friday.
The prices of the West Texas Intermediate (WTI) for September delivery and Brent for October delivery decreased 1.49 percent and 0.65 percent, respectively, in the week ending Aug. 10.
The Houston-based oilfield services company Baker Hughes reported that the number of active oil rigs increased by ten to 869 this week, with more than half of oil rigs, or 485, located in Permian Basin region of western Texas and southeastern New Mexico. The number of gas rigs increased by three, hitting 186, and miscellaneous rig count remained the same as 2 rigs in the week.
Analysts were surprised that five rigs were added in the Permian Basin despite the big price differential between Midland and WTI due to pipeline bottlenecks. They considered the pipeline bottlenecks as a big threat against production growth of the Permian Basin.
Most of the oil production growth in the United States comes from the Permian Basin and that supply needs to be transported somehow to the Gulf refineries or to the ports in order to be exported.
Canada's total rig count declined by 14 to 209 in the week. Canada's oil rig counts declined by twelve and its gas rig counts declined by two this week. Canada's oil and gas rig count is now down by 11 year on year. Oil rigs were up by 13 year on year in Canada, while the number of gas rigs was down by 24.
Analysts attributed the major decline in the Canadian gas rig counts to the very low gas prices on the Canadian natural gas spot market. The natural gas producers prefer curtailing their production rather than increasing in the current depressed market.
Oil prices were pressured on Wednesday as the U.S. Energy Information Administration (EIA) reported a build in the crude oil inventories. Also, the trade tensions between the United States and China intensified as both sides released the coverage of their new tariffs. Pressured by those negative factors, WTI and Brent declined by 3.11 percent and 3.02 percent, respectively, on Wednesday.
Matthew Smith, the director of commodity research at ClipperData in Houston, Texas, told Xinhua that "crude has continued on a gradual bearish path lower in the last week, weighed down by trade war concerns."
Last week, tensions between the U.S. and Chinese trade officials intensified. China said on Wednesday it would retaliate against the latest round of U.S. tariffs on Chinese imports.
China's announcement came after the U.S. Trade Representative's office released a finalized list of 16 billion dollars' worth of Chinese goods. The tariff hike will take effect on Aug 23, bringing the total worth of Chinese goods facing a 25 percent tariff to 50 billion dollars.
Another negative factor that pressures the oil prices is the stronger U.S. dollar. U.S. dollar Index resumed its upward movement and reached its highest levels within the last 52 weeks. Now the index is above 96 level.
Anas Alhajji, an energy economist based in Dallas, Texas, told Xinhua that "the main threat for growth in global demand this summer is the rising U.S. dollar."
U.S. dollar index is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. Oil is mostly traded in U.S. dollars all over the world and a stronger U.S. dollar pressures the oil demand.
For the week ending Aug. 10, WTI for September delivery declined by 1.02 dollars to settle at 67.63 dollars a barrel on the New York Mercantile Exchange, reporting a loss of 1.49 percent in the week. Brent crude October delivery declined by 0.48 U.S. dollar to settle at 72.81 dollars a barrel on the London ICE Futures Exchange, reporting a loss of 0.65 percent in the week.
According to the Weekly Petroleum Status Report by EIA on Wednesday, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve (SPR), decreased by 1.4 million barrels during the week ending Aug. 3. In the previous week, EIA reported a build of 3.8 million barrels.
U.S. crude oil refinery inputs averaged 17.60 million barrels per day during the week ending Aug. 3, which was 118,000 per day higher than the previous week's average.
U.S. crude oil imports averaged 7.93 million barrels per day, which was 182,00 barrels per day higher than the previous week's average. Over the past four weeks, crude oil imports averaged 8.13 million barrels per day, 1.4 percent higher than the same four-week period last year.
Total motor gasoline inventories increased by 2.9 million barrels, about 1.3 percent above the levels of the same week last year.
Distillate fuel inventories increased by 1.23 million barrels, 15.1 percent below the levels of the same week last year. Total commercial petroleum inventories declined by 3.3 million barrels.
According to EIA's report, total products supplied over the last four-week period averaged 21.13 million barrels per day, down by 0.6 percent from the same period last year. Over the past four weeks, motor gasoline supplied averaged 9.70 million barrels per day, down by 0.7 percent from the same period last year.
Distillate fuel supplied over the last four-week period averaged 3.98 million barrels per day, down by 8.3 percent from the same period last year. Over the past four weeks, jet fuel supplied averaged 1.81 million barrels per day, down by 2.3 percent from the same period last year.