Oil Prices Edge Higher as North Dakota Production Set to Rise

Front-month oil prices gained ground early Wednesday, with West Texas Intermediate (WTI) crude trading at $90.02 per barrel, a rise of $0.35, according to live price data. Brent crude traded at $93.92, up $0.68. The price for Bakken crude at the Clearbrook, Minnesota hub was at a discount of $3.42 per barrel versus WTI.

The price strength comes as analysts forecast a build in U.S. crude inventories. Strategists at Macquarie project U.S. crude stocks rose by 2.2 million barrels for the week ending April 17, according to a report cited by Rigzone. This follows a draw of 0.9 million barrels the prior week. The strategists attributed the expected build to a sharp increase in imports and a slight reduction in crude runs by refineries. They also forecast significant draws in gasoline and distillate inventories.

For Bakken operators, the sustained high price environment is translating into increased activity focused on existing wells. Nathan Anderson, Director of the North Dakota Department of Mineral Resources, said Tuesday that the state's crude output is set to climb in the coming months as operators respond to higher prices, according to reports from Bing News and the Boe Report.

Operators are boosting output from existing wells while showing caution on committing to new drilling due to price volatility linked to the Iran conflict. Anderson noted there has been a 13% increase in the deployment of workover rigs in North Dakota, from 110 to 125, as operators optimize existing production. Workover rigs are used to maintain wells rather than drill new ones.

"There are currently 10 hydraulic fracturing crews operating in the state, with one operator in North Dakota set to pick up an additional rig and frac crew in July," Anderson stated. He added that operators who had curtailed production during earlier low prices have brought that output back online since the Iran conflict began, and March production is expected to rise.

However, Anderson highlighted operator hesitancy to add new drilling rigs because of uncertainty surrounding the duration of the conflict and market volatility. Since the war began, U.S. crude futures have traded between a high of $119.48 on March 9 and a low of $69.20 on March 2. Companies are basing decisions on futures prices rather than daily moves; oil for delivery roughly six months from now was trading around $76.50 on Tuesday.

North Dakota's oil production rose by 4,000 barrels per day in February to reach 1.13 million barrels per day, according to the latest state data. The current price strength, if sustained, is likely to support further production gains from existing well stock, even as the rig count remains restrained.