The number of US oil rigs on land has dropped by two, bringing the total to 576. This is the third week in a row that the count has fallen. The oil market is going through some changes. OPEC has decided to increase its output of oil barrels more than expected. At the same time, changes in trade policy are adding to market uncertainty. In contrast, the natural gas sector looks stronger. The number of days of supply in the US has decreased by about 18% compared to last year. As the reduction in US oil rigs continues for a third week, attention turns to the overall supply picture. According to Baker Hughes data, drilling activities on land are steadily declining. This suggests producers are cautious, even as prices remain stable. The drop to 576 rigs indicates lower confidence in short-term returns on new production, possibly due to tighter margins or concerns about storage capacity. The unexpected increase in OPEC’s production, which is higher than expected, seems odd given the decline in US rigs. However, OPEC appears determined to keep its influence on pricing by putting more oil into the market, even if that means lower profit margins. Coupled with changes in cross-border energy policies, this means we can expect more price fluctuations in the short term than usual. These changes, especially trade policies affecting demand routes, add more factors to our pricing predictions. In the natural gas market, supply trends are diverging. The significant year-on-year drop in supply days—around 18%—indicates different incentives for producers. Instead of holding back, they are likely responding to steady demand and lower storage levels, particularly in the domestic market. With fewer supply days available, we can expect stronger spot prices if weather patterns or overall consumption increase. When it comes to trading strategies, pricing may rely less on demand signals and more on production trends. We have already seen that reduced US rig activity is a strong indicator of future price expectations. If traders observe a flat or declining rig count without a price increase, it makes more sense to adjust expectations for near-term contracts rather than long-term ones. This situation may present some opportunity for capitalizing on risks. Longer-term contracts could be at risk of being overvalued if OPEC continues its current approach. With increased output pushing physical supply higher, we should expect downward pressure on future contracts, unless there’s an unexpected drop in inventories. Additionally, the spreads between contract months may widen slightly as short-term storage levels and weather forecasts are updated. Caution is advised regarding steep backwardation—especially if calendar spreads shift faster than the underlying pipeline data. On the gas side, there is some confidence in the market structure. Lower inventory levels compared to current production suggest less excess capacity. This tightness allows calendar spreads to remain relatively stable. By focusing on high-liquidity positions or near-term straddles, traders might achieve better payouts than with straightforward directional bets. Reactions to storage reports should be swift and aligned with observed inventory changes, especially as demand remains seasonally strong.

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