Brent Crude Hits $116 as U.S. Rig Count Stays Flat at 603 and Stocks Fall

Oil climbed to its highest level in more than four years on Friday, Oct. 23, and the U.S. drilling fleet did not respond. The Baker Hughes rig count stayed at 603 for the second week in a row.

Brent traded at $116.52 a barrel on Friday, up 2.96% on the day and about $11 from a week earlier. WTI traded at $102.88, up 3.43% on the day and nearly $5 on the week. The gap between the two benchmarks is now more than $13.

Wall Street takes the hit

Stocks closed broadly lower Friday as crude climbed, according to AP. The S&P 500 fell 0.5%, adding to Thursday's decline, and finished with its second straight weekly loss. The Dow dropped 1.2%. The Nasdaq slipped 0.2% after giving up a modest gain.

U.S. markets are closed for the weekend. The next test comes when trading resumes Monday.

Rigs flat, output down

The U.S. rig count held at 603 for the week ending Oct. 23. That is 53 more than a year ago, when it stood at 550, and a 17-month high, according to Steel Market Update's read of the Baker Hughes data.

Oil rigs rose by one to 460, which is 40 above last year. Gas rigs fell by one to 132, which is 11 above last year. Miscellaneous rigs stayed at 11. Offshore activity was unchanged at 13 rigs.

In the Permian Basin, the count held at 272, up 22 from a year ago. The Eagle Ford added two rigs to reach 51.

Among states, New Mexico added two rigs to reach 98, and Louisiana added one for a total of 41. Texas lost one rig and now has 277. Utah dropped two, to 18. Oklahoma held at 50.

Production moved the wrong way. EIA data show weekly U.S. crude output averaged 13.269 million barrels per day for the week ending Oct. 16, down from 13.679 million the week before. That is 360,000 barrels per day below a year ago.

Primary Vision's Frac Spread Count, which estimates the number of crews completing wells, fell by four to 199 that week. It was the first decline in six weeks. The count is still up 24 from a year earlier.

The supply backdrop

President Donald Trump ordered a 172-million-barrel release from the Strategic Petroleum Reserve in March after Iran restricted exports through the Strait of Hormuz. The Energy Department says the reserve normally holds 500 million to 600 million barrels and has a maximum capacity of 714 million.

Diesel has been the tightest part of the market. JPMorgan analysts have said crude markets have largely normalized while refined product supplies remain constrained. The Wall Street Journal reported that diesel and other refined products made up only 11% of cargoes through the strait, down from more than 20% before the war. Missile strikes and other war-related outages have knocked Middle East diesel refineries offline.

Canada adds rigs

North America's total rose by three to 823 rigs, up 74 from last year. Canada added three rigs to reach 220, which is 21 above a year ago. Canadian oil-directed rigs rose by two to 150, and gas-directed rigs held at 65.

What to watch

A 17-month high in rigs is not a surge, and a one-rig gain in oil is a rounding error against an $11 weekly move in Brent. Output fell in the latest EIA data even with more rigs running than a year ago.

Whether $100-plus WTI pulls more rigs into the field is the open question. The next Baker Hughes count is due Friday, Oct. 30.