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OIL AND GAS
Baker Hughes: North America showing recovery
by Daniel J. Graeber
Washington DC (UPI) Oct 06, 2016


Petroleum sector drags on Norway's manufacturing sector
Washington DC (UPI) Oct 06, 2016 - The slight decrease in overall manufacturing activity in the Norwegian economy can be attributed to weakness in petroleum-related activity, the government said.

Norway is one of largest supplier of oil and natural gas for the European economy and has faced headwinds because of the lower price for crude oil. Statistics Norway, the government's record-keeping office, said there was a 2.1 percent decline in cash collections on manufacturing activity from June to August.

"It was petroleum-related manufacturing, with a share of 24 percent of total manufacturing turnover, helping to pull down the total turnover," the government office said in its report. "The grouping of supplier industries to the oil and gas sector edged down 9.9 percent."

Weak economic growth in the latter half of 2016 for Norway has replaced an economic standstill, with gains in home-building and exports expected to provide a lift through early 2017. Last month, the country's central bank said it was keeping its key policy rate unchanged, noting crude oil prices had recovered from historic lows in the first quarter.

A recent agreement by members of the Organization of Petroleum Exporting Countries to work toward a production cap later this year helped push crude oil prices to yearly highs this week.

Total production of oil and natural gas liquids for Norway was down almost 10 percent, the Norwegian government said, though some of the decline was not market related. At least one field in Norwegian waters was closed for maintenance.

Statistics Norway said it expects total investments in oil, gas, mining and other parts of the electricity supply will reach $26 billion, a figure that's 12.3 percent lower than last year.

North America recorded a 6 percent increase in exploration and production activity, though figures are still far lower than this time last year, data show.

Oil field services company Baker Hughes reported the average U.S. rig count for September was up 28 from the previous month to 509, while Canada posted a gain of 12 from August to 141.

Crude oil prices have recovered substantial ground in recent months, most notably in the wake of a late September consideration by members of the Organization of Petroleum Exporting Countries to hold production levels steady. The price for Brent crude oil is up 15 percent from last week even though no action was taken yet on the OPEC proposal.

Rig numbers serve as a barometer to gauge how confident companies are in investing in new exploration and production activity. The net global rig count for September was up 2.4 percent from the previous month, according to Baker Hughes.

Crude oil production in North American has come under pressure from lower crude oil prices, but last week's OPEC agreement has given the market optimism the market won't crash again below $30 per barrel, as it did earlier this year.

Though there's a lag time between when rig activity could be reflected in production figures, the recovery indicated in Baker Hughes' data for September suggests North American output could rebound. In terms of confidence, Baker Hughes reports the rig numbers outside of the United States and Canada actually declined modestly.

The increase in crude oil production from shale basins in the United States helped push the market heavily toward the supply side and pull oil prices far below the $100 per barrel mark common two years ago.

Nevertheless, the North American rig count for September was down more than 50 percent from last year.


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