Market traded in tandem with DOE inventories as the draw in crude was a bit larger than anticipated and the builds in products highlighted fundamentals as the key price driver. Geopolitical events in a number of areas could become bullish with an interesting turn of events in the Middle East with Turkey’s actions this week. North Korea tensions continue to mount and could prove problematic for the region if China’s diplomatic actions do not curtail some of this escalation. Economic factors are fairly offsetting and create more of a neutral impact on energy for now. Forward prices are migrating to the lower boundary of the range and may present a hedging opportunity for those looking to start layering forward pricing.

The U.S. rotary rig count from Baker Hughes was up 10 at 857 for the week of April 21, 2017. It is 426 rigs (98.8%) higher than last year. The number of rotary rigs drilling for oil was up 5 at 688. There are 345 more rigs targeting oil than last year. Rigs drilling for oil represent 80.36 percent of all drilling activity. Rigs directed toward natural gas were up 5 at 170. The number of rigs drilling for gas is 79 higher than last year’s level of 89. Year-over-year oil exploration in the U.S. is up 100.6 percent. Gas exploration is up 89.8 percent. The weekly average of crude oil spot prices is 21.8 percent higher than last year and natural gas spot prices are 62.2 percent higher than last year.

Canadian rig activity was down 19 at 99 for the week of April 21, 2017 and is up 59 (147.5%) than last year. Rigs targeting oil were down 7 at 22 and is 21 (175.0%) higher than last year. Gas-directed rig count at 66 was down 12 and is 39 rigs (144.4%) higher than last year. Canadian drilling falls rapidly in the spring to avoid environmental damage moving drilling equipment during the spring thaw and rainy season. With large weather related seasonal swings, even year-over-year comparisons can lead to incorrect conclusions.