Natural gas prices have fallen to a 17-year low. The number of drillers that can remain profitable at these prices has also collapsed.
There’s only 97 rigs operating today compared to 900 about five years ago. This is the first dip below 100 rigs in three decades.
Natural Gas Monthly Chart
Only 97 Rigs Left
Bloomberg reports Fewer Than 100 Gas Rigs Drilling in U.S. as Rout Pains Producers.
For the first time in at least three decades, fewer than 100 rigs are drilling for the fuel.
Drilling rigs targeting gas slid by five to 97 in the week ended March 4, the least in data going back to 1987, Baker Hughes Inc. said Friday. There were about 900 working in gas fields five years ago.
The declining rig count portends the drop-off in gas production that analysts have been calling all year as prices have slid. Bullish gas traders have been waiting for drillers to cut deeply enough to shrink output from shale formations and eat into the biggest supply surplus in four years.
In 2008, when gas lat spiked above $13.00, I received several calls a day generously offering me the option to lock in gas prices at $12.00.
The messages from various utility companies or their suppliers was the same: There is a shortage of gas, and prices would go to $20, then $30. “Better lock in now!”
I said no thanks. History suggests cold calls like these come at market extremes.
It’s fitting that about a month ago I started getting calls advising me to short gold.
Mike “Mish” Shedlock