By Adam Natwick, AVP Senior Trust Officer

The U.S. rig count has gained one more rig in the last week to reach a total of 707 active drilling rigs.  This count is up just 1% over the last month, but up 155% in the last year.  The most notable rig increases are unfortunately not in the Bakken, however the rig count is currently at 33 in North Dakota which is an increase from the 10 operating rigs we had at this time last year.

At the time this article was written WTI Crude oil is sitting just over $78 per barrel, which represents a major improvement over the $52 per barrel prices that were seen at this time last year.   While many factors go into the price of oil, most recently, factors such as improved risk sentiment and the global energy crunch appear to be the driving forces behind keeping prices stable for now.  Even with OPEC enacting a slight output hike, prices appear around $80 appear to be here to stay during the winter.

Where are oil prices going from here?  While we wish we had a crystal ball to tell us this we do have several key points we can look at to help us see where the market feels the prices of oil may be going in the near future.  Predictions were for a price forecast of $80 a barrel for the last quarter of 2021 and we are seeing that now. Due to natural gas shortages and a post-pandemic demand that is outstripping supply, we could very well be on our way to $100 per barrel oil.

As you may have heard, due to substantially increased activity in New Mexico, North Dakota gave up its spot as the No. 2 oil producer.  What does this mean for North Dakota?  The production drop in North Dakota is not the main driving force behind this.  New Mexico currently has 62 more active drillings rigs than North Dakota.  Per the North Dakota Industrial Commission, companies are starting to bring on additional frack crews and have a fairly substantial back log of drilled but not yet completed wells to frack. 

In summary:  While the oil industry as a whole was hit especially hard during the pandemic, many of the producers that had high debt loads were forced out of the market through sales or bankruptcies which has allowed these companies to reorganize and fine tune their development plans going forward.  This combined with the current backlog of wells needing to be fracked should provide for substantial oil and gas development in North Dakota for many years to come.