US Baker Hughes Natgas Rig Count (Oct/09) 132 (Prev. 133)

The weekly Baker Hughes rig count is a supply-side staple, and the gas rig series has historically mattered most at inflection points in the price cycle rather than in single-print moves, with a one-rig weekly change falling well within the noise of prior episodes. The read-through that has tended to work is the trend over a quarter, since drilling response to sustained price weakness or strength shows up in the count with a lag of months, and it is that lagged trajectory rather than any Friday print that has fed into forward production estimates and the Henry Hub curve. Worth distinguishing the gas count from the oil count in the same release, since associated gas from oil-directed drilling has in past cycles kept supply growing even while dedicated gas rigs declined, diluting the signal from this series alone. The follow-ons are the next EIA storage and production figures, which confirm or contradict what the rig trend implies. As a low-frequency supply indicator, the print is context rather than catalyst.