Baker Hughes, Inc. (NYSE: BKR) reported on Friday that the number of active U.S. rigs drilling for oil fell by two to 609 this week. This follows a climb of 10 oil rigs last week, and the total active U.S. rig count, which includes those drilling for natural gas, also declined by one to 760. This news comes as oil prices continue to trade lower, with the March West Texas Intermediate crude contract (NYSE: CLH23) down $2.66, or 3.4%, at $75.83 a barrel on the New York Mercantile Exchange.
The latest Baker Hughes report is yet another sign of the volatility of the oil and gas industry. The number of active U.S. rigs drilling for oil had been steadily increasing since the beginning of the year, and the two-rig drop this week is a sudden reversal of that trend. This could be a sign that the oil industry is beginning to feel the effects of the ongoing trade war between the United States and China, which has caused global oil demand to drop.
The decline in oil prices has been felt by oil and gas companies around the world, and the United States is no exception. As the number of active U.S. rigs drilling for oil falls, the industry could be facing a period of reduced production and lower profits. This could have a significant impact on the U.S. economy, as the oil and gas industry is a major contributor to the country’s GDP.
The decline in oil prices is also having an effect on the stock market. Many oil and gas stocks have been hit hard by the decline in oil prices, and the sector as a whole has been underperforming the broader market. This could be a sign that investors are beginning to worry about the long-term prospects of the oil and gas industry.
While the latest Baker Hughes report is certainly cause for concern, it remains to be seen how the oil and gas industry will respond to the current market conditions. Many companies have already begun to cut back on production and exploration in an effort to reduce costs, and some are even considering shifting their focus to alternative sources of energy. It is possible that the industry could eventually recover, but it is clear that the current market conditions are having a significant impact on the sector.
The oil and gas industry is an important part of the U.S. economy, and the latest Baker Hughes report is a reminder of the industry’s volatility. The industry is facing a period of uncertainty, and it remains to be seen how it will respond to the current market conditions. In the meantime, investors should remain cautious and monitor the sector closely for any further signs of trouble.
